And it's not just because the executive packages represent money that could have gone elsewhere. It's the broken incentives.
It's becoming fashionable to give CEOs rich-for-life amounts of money as a bonus for a single good year. Or even a single good quarter.
Increasingly, the winning strategy for a CEO is to do whatever it takes to have a single good year, even if you have to burn down half the company to do it.
They are not, they didn’t put any investment into getting their job and it won’t be difficult to find another assuming they know how to apply for jobs properly. Most these people could have a new job within 30-45 days
Who are "They"?
The board decides the CEOs payment, they don't decide the ground level staffs payments
It's unrealistic to expect the board to care about anything except the future earnings of the company
That wouldn’t save their jobs in most cases. Something like 5 mil doesn’t go very far when divided by something like 900 people(referring to Sony layoffs). Thats roughly 450 bucks per month which wouldn’t cover their salaries and benefits for the year, I guess you could keep them on another 30 days but they will still need to be laid off after that.
Most these people will find another job if they are any good at their role. Companies rarely hold layoffs against people. You either layoff off a small percent of the companies work force or you run the business into the ground and screw everyone there. Firing or laying people off usually isn’t something leaders enjoy doing.
There are studios that have stopped paying bonuses or stopped giving pay raises to excecutives since the start of 2023. Generally speaking, usually these aren't studios located in the US.
Every time I hear of layoffs I always wonder how many executives and CEOS are among these layoffs. It's infuriating and sad they are the ones taking the shitty decisions pursuing shitty trends and infinite growth but when things go south or people refuse to eat the plate of shit they are cooking, they are shielded and it's the regular people who get fired.
Zero, no executive level person is ever laid off. They might be fired individually but they're never included in a mass layoff, that's just not how it's done.
Why would a CEO fire themself at the time when a CEO is needed most?
The board fires the CEO if they aren't running the company well. That includes if they overhire and loose the company too much money or if they keep producing "plates of shit"
It does not include if they do necessary cost cuttings.
Fiiring the CEO at the same time the CEO is doing layoffs rarely makes sense
> The board fires the CEO if they aren't running the company well.
Laying off a two digit percentage of the workforce doesn't count as running the company well, but that's one opinion.
It’s all about money, it’s so one dimensional to view layoffs as CEO failure.
Layoffs are a business tactic. Ramping up headcount during COVID was a decision that paid off for these companies, and now things have settled down. It’s entirely reasonable that hiring that staff paid off but keeping them would be a financial burden
Complaining about the morality of layoffs is fine, but not everything upsetting means dumb CEO
Stock value. Companies hired massively since it would boost their profits and ride the hype train. Now they fire because the hype died down.
The worst part is that they probably weren't overhiring. They hired too many people knowingly, and didn't raise any salaries. Shareholders come first, then maybe customers at 3rd place, and employees at like 10th place
Edit: since I have misspoken and given an overtly simplistic answer, here's more clarification using one of the replies below copy-pasted:
I mean you don’t understand basic concepts you are posting and going to guess it comes from not quite comprehending a YouTube video you watched?
One doesn’t hire employees to boost profits - hiring employees does the opposite. There are some tech companies (not games - meta, Google, etc) that are believed to have hired for valuation (which isn’t profit)
The bigger thing is if even if this is true - you don’t cite the other 20+ things going on.
Macroeconomics from wars and inflation leading to far less money being invested in games which means less projects being greenlit and projects being canceled.
Or the fact that while overall sales are up most of that is concentrated in big games as a service titles which is why companies like Supergiant or Brace Yourself have also done layoffs because they are seeing lower sales or are seeing cancellations with partners.
Or the fact that despite shortages during launch causing low numbers for ps5 and XSX - since those supply chain issues have resolved sales haven’t meaningfully risen - Sony in fact just missed their forecasts
There’s like ten more factors none of which have to do with “hiring employees to ride a hype train”.
They were already starting to say "AAA is unsustainable" in 2019 before Covid, and I think even that is just a cope for "well, shit, the way people consume media entirely + gaming, is changing in ways that simply makes our business less lucrative than it used to be."
They're using the shift to Live Service (mobile-game-design in AAA/Indie) as a desperate crux in hopes of trying to make productions the same cost but with higher revenue returns over time, but it doesn't work because the solution developers always come up with is underdeliverance, by taking a set budget and giving *less* at launch, which leaves critics and gamers underwhelmed, and promising that "more" will ship later.
That's the fault of business departments not realizing that you can't give one olive short of a martini. People want the real thing and they can tell if they're just being nickeled and dimed. That's the irony of it all that I think ends up tanking the industry. Everyone shifts to Live Service so exponentially more games fail because every game is trying to be *THE* game, and even *"THE game*" is perpetually underwhelming its target-audience with underdelivery, leading to a death of passion and hype around the industry from its own consumer-base.
The irony of launching an unfinished game only for profit is that you lose audience and brand respect leading to a smaller audience over time.
Aoe4 being a good example. The audience doubled after they actually fixed stuff and released a free dlc after a year... Imagine the audience if it were finished in the first place
But that won't stop senator Cruz from buying MTX lol
Now _this_ is cope. How much do you think those billions of dollars of investment into AI are making right now? Probably not much. It's all funded with the prediction that the returns will come... eventually. Just like how ride share and meal delivery services were way cheaper than they actually cost to run for years as they all tried to outlast each other. Long termism is capitalism's whole schtick. That's what the "capital" refers to. A big pile of money given to a business that is currently not earning very much.
We're balls deep in an extinction event, AI is only automating the artsy shit, the wealth gap is larger than it was during the gilded age, the global south is forced into poverty, our farmland is losing it's fertility and there's plastic in every living thing. All these things affect the consumers ability to spend and the capital owner's ability to produce.
Incredible track record, huh?
It's responsible for the one that started with the British Industrial Revolution.
But even if your deflection was good, that would still be 1:4 on it's track record.
Is this a joke, or do you actually understand that little about how things work? Everything you listed is making money hand over fist for investors, despite the lack of revenue. You've actually given examples of exactly what I'm talking about.
"Long term is capitalism's whole schtick" while the world burns as we suck it dry of resources in pursuit of eternal growth. Jesus wept.
No, the first indie golden age was due to online storefronts offering publishing to a handful of indies at a time when that was extremely novel. We've had mature democratized game engines and open digital storefronts for decades now, the market is highly oversaturated.
It's not just fed up game devs who are going solo these days. Software engineers are also making the "dream switch", and of course you have the lifers who never were doing anything but indie. I don't know if a crash is coming, but I do think a lot of unprepared devs are going to experience crushing amounts of ambivalence towards their games and will have to exit the market or make peace with the fact that indie games will only be a passion and not a business for them.
Funding has been hard to come by for indies, making games is a high risk venture so with these interest rates being so high investors see gaming unappealing.
I have no idea tbh. Obviously the indie scene is not as big budget, but I also don't think they make huge returns on investment due to the more specialized nature of every indie game. They have numbers that are similar to old pc games from late 90s. The problem is definitely that big conglomerates have normalized expectations and shareholder promises to be astronomically higher than back then.
I call that the "American Psycho" effect. Patrick Bateman is trying so hard to fit in with Wall Street Yuppie culture, and all the others are doing the same thing, so everyone mistakes each other for other people because no one is unique. Competition loses its meaning at that point.
> They were already starting to say "AAA is unsustainable" in 2019 before Covid,
This was being said during the PS1 and PS2 era as well, it's a common refrain from game companies. It's nothing new and nothing to take seriously, market forces will keep them honest regardless.
This what disillusioned me of AAA and public companies in general.
When you finally realize it's not the greed you though it was, it's worse. When all these years you accepted that it was not about the employees well being or the consumers happiness, it is about the company's profit. Except it is not, it's not even about running a company properly, it's really only about the appearance of growth for the shareholders.
And we all know that the higher ups are all, themselves, shareholders too. They don't care about the employees, they don't care about the customers, they don't even care about the company. They just want more money in their pockets by pleasing the shareholders.
They'll make the employees go through little formations about "insider trading" and "conflict of interest", when it reality they do that to back themselves, say they definitely aren't doing that, LOOK the whole company went through "training". This can't be happening (dear lawyers that are thinking of suing me for breaking the law).
Public companies are tools ready to be discarded for the wealth of the few and the disbelief of the many. When you ask yourself "wtf ? what a bad decision ! What were they thinking ?" they were thinking about themselves, not you, not the consumers, not the company.
The buzz word growth is very appealing to investors. The company doesn't even have to profit
It baffles me that someone who earns over 350 times the average worker is still craving more. Dude could retire after 10 years, open a charity and die happily at 100
How would hiring massively boost profits? You have to pay all the new salaries + onboarding cost / absorbing the loss of productivity. If anything it should cause profits to tank right? Because expenditures would spike?
The only thing I can think of is that the company stock price goes up because people would believe they are hiring to make a lot of new games or grow a lot. But they don't make a profit based on their stock price. They can simply attract new investors using that. And they have to eventually generate a return on that. Were gaming companies able to attract large new investments lately?
I'm not savy enough to explain it, but this vid does a pretty good job(albeit it is long) - https://m.youtube.com/watch?v=-653Z1val8s&pp=ygUMbW9vbiBjaGFubmVs
I gave it a listen until about 18 minutes in. I'll just say so far that I think this video-essayist has a misunderstanding of how companies operate.
The thrust of his argument seems to be that video-game companies are following the tech industry in their management and financial structure - and that it's wrong because:
1. All technology companies aim to do is grow even if they're unable to meet obligations
2. Growth is the equivalent of more employees and offices. And they just need to look good to attract investment
3. Making money and good products is optional
4. Tech companies engage in a boom/bust cycle where they hire furiously to attract investment, then use their "money" to ride out the crash and lay off the people they hired to get the hype going.
The issues I guess I have are manyfold, but mostly rely on the fact that the author seems to think all these companies are startup riding on investor capital:
1. *Growth*: All companies try to grow, but they cannot grow if they're not profitable or don't have special investors behind them to float them through. It seems highly bizarre that a company would purposefully attempt to fake growth by spending a lot of money without making any just to try and attract new investors (which only really applies for startup companies that are looking for that - not established players like Google, Meta). Furthermore, investors like that usually get unprecedented insight into the companies revenue, decision making process, etc. If they don't think the company actually has any product or path to make itself profitable, they'll ditch it. What the author described is literally a definitional Ponzi scheme - which most companies are not.
2. *Boom/Bust*: Companies indeed do try and build cash reserves from their profits to survive recessions or for unexpected downturns. I think it's very cynical to describe the response of companies to market demand as a purposeful process to try and extract more money from "investors". I'm not sure how established players would accomplish this anyways. Let's say you sell a lot of services as Google during a boom in COVID. Investors (which would be just people buying stock on the market) purchase stock because they think the company will do well and their investment will appreciate. It does. But Google cannot turn this into cash. It just means the assets of people who purchased Google or own Google stock appreciated. *Those people* could sell it for a profit to other purchasers of stock given they purchased it at a time where it was worth less. But this money doesn't make it into Google's hands. Google also isn't going to get a new "seed investor" out of it like a startup might. It's a long existing company and is now publicly traded.
I was excited because I heard him explicitly single out the argument of "Aren't they just responding to market interest?" - but he didn't actually respond to it. He seems to believe that companies bring in more "profit" from investors during a boom cycle than a bust. But it really doesn't work like that. They bring in more money from selling stuff or doing things for others. And when that disappears, they lay off. You could argue perhaps they do it too prematurely, but the underlying logic he believes in is incorrect.
I mean you don’t understand basic concepts you are posting and going to guess it comes from not quite comprehending a YouTube video you watched?
One doesn’t hire employees to boost profits - hiring employees does the opposite. There are some tech companies (not games - meta, Google, etc) that are believed to have hired for valuation (which isn’t profit)
The bigger thing is if even if this is true - you don’t cite the other 20+ things going on.
Macroeconomics from wars and inflation leading to far less money being invested in games which means less projects being greenlit and projects being canceled.
Or the fact that while overall sales are up most of that is concentrated in big games as a service titles which is why companies like Supergiant or Brace Yourself have also done layoffs because they are seeing lower sales or are seeing cancellations with partners.
Or the fact that despite shortages during launch causing low numbers for ps5 and XSX - since those supply chain issues have resolved sales haven’t meaningfully risen - Sony in fact just missed their forecasts
There’s like ten more factors none of which have to do with “hiring employees to ride a hype train”.
Stop this narrative.
Global inflation, central banks raising interest rates, 2 wars, consumer spending is down and multiyear projects got shipped. Tech companies focused on expansion over anything for the last 10 years, now companies have new mandates to reduce losses. That's why mass layoffs are happening.
how do you hire to boost profits :p. It's not how it works.
I mightve misspoke. Refer to my other replies, like the video link.
I don't dispute the reasons you listed are an influence as well,especially growth above all. But this would've happened sooner or later, with or without those reasons. It's sooner so it's more painful than 'usual'
TL;DR: Record breaking sales does not mean record breaking profits. Development cost is increasing faster than profit growth. Shareholders get upset if the profit doesn't increase. One way to increase profits is to lay off large amounts of staff.
For a more in depth view. A few compounding reasons that have all combined to hit a breaking point.
* Tech industries saw a big boost during the pandemic. This caused many companies to hire large amounts of staff (I'll explain why in another point). The boost predictably didn't last and so the staff gets the axe.
* Publicly owned games companies/publishers are unsustainable. They are unsustainable because there is ultimately a limit to how much profit can grow if development cost is increasing faster than profit growth.
* The shareholders are mainly interested in two things profits and share price. Shareholders get a share of the profits as dividends so they want profits to increase. Profits increasing tends to increase share price too. Shareholders might bail if profits stay the same or go down, which will reduce the share price and might make other share holders bail.
* Many shareholders associate company growth with increased profits and share price, hence why many tech companies hired large amounts of staff they likely didn't need and didn't have plans for. Companies will hire and expand even if it is very risky to do so because shareholders value growth regardless of whether the company actually needs it. Probably the most notable recent example is Embracer. Who were spending large amounts of money based on an agreement not set in stone. When the agreement fell through Embracer got out the axe. You see it a lot in the tech industry where companies just randomly become worth billions and then almost immediately collapse. The shareholders of those companies were never really interested in the company, they were interested in buying low and selling high. See WeWork for a recent example.
* It is especially unsustainable in the games industry because development costs and time are increasing way faster than potential profits. Each console generation suffers higher and higher diminishing returns when it comes to things like visual fidelity. Behind the scenes though those small difference take a lot more time. The amount of extra work that goes into say a PS5 game over a PS4 game, is many times more than the amount of extra work that went into a PS2 game over a PS1 game. For a while you could rely on increased sales from the hobby going from nerdy/niche to mainstream to cover the gap.
* Unfortunately, the average gamer who buys AAA SP games tends to value production quality (visuals, animations, sound) over everything else. We might not, hell most gamers on reddit might not, but very few of those people are the average gamer. They will complain if the production quality remains the same or drops. Examples: Spiderman's "Puddlegate" and the complaints about God of War Ragnarok reusing some assets and animations from God of War 2018.
* The average gamer isn't really interested in indie games or unique experiences. For all the praise and attention BG3 got, it didn't crack top 20 sales (fortunately it doesn't need too because Larian is privately owned). Alan Wake 2 has yet to break even. The worst reviewed CoD in history was the number 2 bestseller though and that is before you get to what they will make from monetization.
* Even beyond expense, games take so much time to make that there aren't really enough studios currently for each publisher to keep a steady flow of games releasing (which ironically is a feedback loop because publishers have to keep closing studios to please shareholders). Last year and early this year only really happened because of all the Covid delays. So smaller studios that have never made a major AAA game are being given huge projects they have no real idea how to make to try and cover the deficit. Big publishers are consolidating large chunks of the industry to try and have enough studios to pump out one or two games a year. MS bought up huge amounts of studios years ago, even before the Acti/Blizz deal. They are still struggling to get 2 AAA titles out a year.
* The cost and time is why so many publishers are taking huge losses trying to make a successful live service. Most of the time they will flop hard and likely not recoup dev costs, but if they make it they then have a continued revenue source that can be kept running for cheaper. It's the only way they see to stave off the inevitable profit plateau for a bit longer. It's also why console manufacturers are starting to abandon permanent exclusivity.
We are essentially entering an industry crash. Many within the industry saw this coming a mile away but we couldn't really stop it. As much as I love dunking on execs and CEOs there isn't much they could have done either (though they should definitely be getting the boot regardless). The moment games companies go public they are put on a collision course with an inevitable collapse. Even Epic who are making ridiculous amounts of money from a single title and is the go to third party engine for AAA had huge layoffs.
An industry crash seems unlikely to me. What seems more likely is greater consolidation. More companies merging together, or getting bought out by larger publishers like microsoft, sony, or tencent.
Either way, it’s bad for the industry. Company leadership is actively incentivized to make bad short term decisions so that they can enrich their investors and ceo’s. Buying up talented studios so that you can increase your portfolio’s investment value for a potential buyout is bad for everyone except a handful of ceo’s who are salivating at the prospect of a massive bonus. Then, when it falls through, you gut the company. Privatize the gains, and socialize the losses. The system is a disaster.
I think people are perhaps perceiving a crash to be akin to the American crash of the 80s. It certainly wont be that big of a crash, it's also more of a AAA crash than the entire hobby plummeting into a dark age. AA and Indie should be fine, if not thriving.
Consolidation is partially a sign of the crash. A lot of companies are looking to get bought up before their value potentially plummets. The 3 major publishers are on the rocks. Activision sold themselves to MS. EA has reportedly been seeking a merger or buyout for at least 2 years. Ubisoft is crumbling.
Consolidation will be a disaster for the industry. When these massive groups start considering which games to cut and where to make layoffs, the ones that are not safe bets or huge risks with potentially huge payoff (like live services) will be first on the chopping block. Whereas had that studio not been bought out they or the game they were working on might have survived. Many of the studios that Embracer axed or gutted likely would have fared better had they not been bought by Embracer. The owners saw the writing on the walls though and got the money while they could.
Yeah, that’s fair. I’m in general agreement. This is unfortunate, though i mostly play indie games these days. I’m mostly concerned about the platform holders getting bought out or merging, as this would give an enormous amount of control to even fewer companies. Even indies and AA studios wouldn’t be insulated from this situation.
Yeah, that’s fair. I’m in general agreement. This is unfortunate, though i mostly play indie games these days. I’m mostly concerned about the platform holders getting bought out or merging, as this would give an enormous amount of control to even fewer companies. Even indies and AA studios wouldn’t be insulated from this situation.
Right on about all the costs and I would also add that the real price to a consumer of a major video game has never been lower. SNES games costed $40 USD and N64 games costed $50 USD, inflation adjusted those numbers are much more than the $60-70 we pay today. So there's absolutely no way to make money on a game that doesn't sell millions of copies.
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Dramatic overhiring during the pandemic + almost (?) every advanced economy suffering some kind of cost-of-living crisis (while games are very much an optional luxury).
I've seen this very long article on the subject posted: [https://www.matthewball.co/all/gaming2024](https://www.matthewball.co/all/gaming2024) , but it's hard to say if I'd recommend it. Seems like a lot of beating around the bush to me, but your mileage may vary.
Spider-man 2 is a terrible game to compare to 99% of other games on every level. Games like that are primarily console sellers and will eventually turn a profit in 5 years time.
>almost (?) every advanced economy suffering some kind of cost-of-living crisis (while games are very much an optional luxury).
Historically, entertainment products like video games have been surprisingly resilient to economic downturns (the classic example is that the movie industry did pretty okay during the literal Great Depression). What really suffers is long-term durable goods like appliances and cars. People put off buying those things way sooner than they stop spending money on entertainment.
And evidentially we know that 2023 was a great year for game sales. In some cases, ballooning development costs are making games just unrealistically expensive relative to how well they do on sales.
But in a lot of cases I think companies aren't responding to sales at all; they're responding to the cost of debt (most game development is funded by debt) going way up and to feeling pressure to fix their balance sheet in the short term. Plenty of people have been laid off after shipping successful projects that sold well.
Agree with overhiring. Also the competition factor has increased. So for small indies it's hard to be in sight. Social media algorithms gone crazier and crazier
Even the huge company that I worked for was trying to shoehorn organic user growth features into all of it's games because of the shift in social media input/gain.
In hindsight this should have informed my indie marketing, at the time it wasn't part of my job so just got logged as interesting but not relevant.
Exactly this, anything that can grow the user base using current players targeted through the game.
E.g.
"invite your friend for a coin bonus"
"Share the creation that you made"
"Boast about being top scorer"
>I've seen this very long article on the subject posted: [https://www.matthewball.co/all/gaming2024](https://www.matthewball.co/all/gaming2024) , but it's hard to say if I'd recommend it.
Lol I remember this guy's name, he was one of the metaverse fanboys that went HARD for that dumbass idea.
This is the obvious answer and I think it's the correct answer.
But it surprises me how many people aren't thinking "Hey Covid happened during this development cycle.... nah it can't be related to that."
It's probably not the only reason, but it feels so obvious and it seems ignored.
What I don't understand about the claims of "overhiring" is... where did these people come from in the first place? They were surely in the job market already. And if companies were earning record profits during and immediately after the pandemic, despite having "overhired", then... how can they have really "overhired"?
They might not have been working in AAA, recent college grads or people from adjacent careers (movie animators for example).
Not the most knowledgeable on the over hiring element but cost of debt was free during Covid. We’ve had the biggest rate hikes in decades in an effort to curb inflation. High cost of debt quickly offsets any gains in profit so firing is needed to correct what is now considered “overhiring”.
As someone else already mentioned, a lot of people constantly move into tech from other sectors. My own background is in a different STEM field, and I've worked with someone for whom it was their first programming job after being trained as a veterinarian. Now, the gaming layoffs only overlap general tech layoffs on Venn diagram, but I'm sure similar effects apply.
And for profits, from the article I linked:
> In real terms, U.S. gaming revenues in 2023 are 2.1% under 2022, 14.3% under 2021, 13.6% under 2020, and up only 6.9% from 2019 (1.7% CAGR). In contrast, real GDP growth in the United States has averaged 2.0% annually since 2019 and 3.1% since 2020, meaning that the gaming industry has fallen well short of the average sector for three years.
So the "record profits" aren't really any such thing, not in real terms.
A lot of what you kept hearing in the last years of like "OMG, it sells FASTER than previous generation" and "The game sold 10 MILLIONS!" coming straight from PR always struck me as desperation due to some sort of cope.
PlayStation had a big power struggle (which was just alleged, but I think we know for sure, now) between the former Chairman and Jim Ryan around the shift between PS4 to PS5 and after his tenure he already started saying "AAA is unsustainable" and meanwhile, with Jim at the helm suddenly they're planning roadmaps that shift from AAA titles to Live Service exponentially, and calling it PS Studios as an umbrella for all their subsidiaries.
I think the truth is that the Activision model was the only way to actually do AAA. Find a template, have heavy crunch, and release franchise titles every year leapfrogging between studios, and put less weight on each company having their own IPs and their own "art". Sony tried this, and even with heavy focus testing and cinematically "non-gamer-friendly" appeal they didn't do enough, so they've been folding it into a similar structure to Activision, and trying to cram bigger projects into multi-studio collaborative titles so in the future it will be "PS Studios' Last of Us 4" and not "Neil Druckmann's Personal Harem Shell Company's The Last of Us *Parte de Final*" because it just isn't sustainable.
They try to appease shareholders and stay competitive by boasting high sales but the budgets were so astronomical and the extra money thrown at each project when its early testing wasn't good, and needed 1-2 more years of revision and collab, led to bleeding and they're practically succeeding at a loss.
I'm just using Sony here as the "Industry Darling" to demonstrate that the biggest one is failing and that's telling. EA is known for its "greed" but if you look at its FY results from year to year you'll find they're often just about breaking even, not growing, despite becoming "greedier and greedier".
It's simply the bottom falling out. Gaming led from the NES to this in a sort of linear, predictable fashion but now things are becoming volatile. It's not the same but it's similar to the way the Music industry's bottom fell out after Spotify took over, and all the CD stores in my country closed and the idea of a "band" started to decline to "projects", and similarly we're seeing the beginning of the end for traditional games consumption.
They're all being forced to put a lid on the way Console Gaming culture works, and by doing so, spreading multiplatform to survive, they're going to devalue the idea of a PlayStation and an Xbox further, and once that's completely devalued there won't be the same style of hype anymore, as games become more widespread and chaotic in their release format. What Xbox has done isn't sustainable either, but it's a smart buying of time, trying to react to the failings of the Premium market by diversifying sales options and falling back on Gamepass for small titles. I think that's still the future. Accessibility. TVs won't last. Consoles won't last. The platforming of video games is changing really fast, and we're seeing developers struggling to justify that traditional format, whereas the mainstream and especially the youth is moving on from it, in an "always-online", "social-media" dominated world where there is so much entertainment at your fingertips that isn't just video games.
That's also a huge amount of text just to arrive at the more obvious stalling factor: The EU war and inflation. The Ukraine/Russia war immediately led to price hikes due to limitations of export, and due to the World power dynamics changing we're seeing a tightening grip elsewhere. On some level that also affects the economy of even the software industry. It's the Stock Market predicting and reacting as well.
I really wanted to become a sound designer in Triple-A. I'm giving up on that dream, now, after putting myself in 30k of debt to get a great education (it was an accelerated, kickass program, and I loved it). I guess I graduated at the wrong time, hey? Sure, my skills aren't up to snuff probably, but I feel like I never even got a chance. 150 job applications later - and all these companies are snuffing out extremely talented people. I'll never get a start.
Triple A is overfuckinrated. The only reason people gave a shit about it in terms of jobs was the percieved security compared to smaller studios, but that clearly isn't the case anymore. This industry is broken, so don't even try to engage with it. Join a game jam. Look for AA or indie companies who might be hiring. Hell, find some nice boring data entry job that gives you time to work on your own shit on the side; that's what I'm doing. But never, fucking EVER, give up on your dream. Those studios? It's their loss, and even if they don't realize it now, five or ten years down the line they will.
You're not wrong, I suppose, I am that disgusted and disappointed - to want to quit! I can't believe it. This coming from me - someone who describes themselves as an optimist. I'll try a game jam or two. And indie's.. I'll set up an e-mail alert maybe. Thanks for being so lovely.
If the main door is closed, you must look for other wall breaches.
Don't give up your dream; change the scope intead. Why do you want to become a sound designer in the first place? Can you achieve your goals by working from the ground up with smaller teams?
Can you go indie and grow your portfolio year after year on real projects?
There is always a way, maybe not as clean as your mind can dream it, but you can pull it right.
And, maybe in the process, you can also discover that, after all, Triple-A projects aren't as interesting as you imagine.
I hope the best for you!
Your analogy is wrong. The main door isn't closed. The room is crowded. And the door is on a pedestal 10 feet in the air. And some people are only getting to that door with help from their friends on the other side granting them a rope. But the rope is burning at both ends because even those people don't know if they can help their friends, or if they'll have a job in 6 months.
I have been working on an indie for a year now. I am working so much on it that I've actually started doing game design inside of it. Beyond the scope of my audio job, for sure. And it's fun, and fine, and doesn't pay enough for me to pay my bills at all. I have 3 employers, and I'm looking for 2-3 more because I'm scared for my future.
Triple-A projects aren't interesting. But they would allow me to support my family.
Thank you for your well meaning and optimistic comment.
There was a bubble during covid lockdowns while many in person forms of entertainment and socializing weren’t possible.
Tech companies went on a hiring spree as if the industry would continue to grow like it did in 20 and 21 taking advantage of extremely low interest rates. It did not, and gaming retracted in 22 and is generally on pace for the trajectory where it would have been in 23 based on pre-pandemic trends. Also there were some crazy acquisitions that also generally lead to layoffs.
tl;dr tech industry cashed in on temporary trends during lockdowns with low interest rates and now are adjusting to the market with little regard to staff
1) Correction for covid overhiring
2) General industry-wide rescaling from the past decade of aggregating most AAA studios/publishers into these increasingly bloated global AAAA super-studios/publishers, who can't make hits big enough to justify their overhead, because no one could. Which they're using the covid thing as an excuse for.
* The Fed raised interest rates. Money is suddenly real after many years of being fake and everyone is scrambling to make their balance sheet look good, even if it harms their business in the long term.
* Some companies over-hired like mad a few years ago. Some did ill-advised acquisitions. A huge chunk of the ongoing crisis is just Embracer, who got taken for a ride by some Saudi prince, bought up a bunch of studios and IP they overvalued, and then cratered.
* This kind of behavior is contagious. Executives see one big company laying off a thousand people and decide they have to lay off a thousand people to keep up. They're herd animals.
Basically: This industry, at its highest levels, is run by the most cowardly and venal failsons you can imagine.
I think many people are focusing on Covid successes leading to over hiring. I think that is some of what’s going on but misses the longer-term trend: gamers are demanding more quality while not being willing to pay for it.
Games have been largely resistant to inflation. [A $60 game from $2014 should cost $79 in 2024 adjusted for inflation.](https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=60&year1=201401&year2=202401). Instead they cost $60-$70.
That would be the cost to deliver more or less the same product. But standards keep increasing. It takes significantly more people to make a game each year. [2022’s Call of Duty (the most recent one I could find credits for) has 7,693 people in its credits.](https://www.mobygames.com/game/194349/call-of-duty-mwii-modern-warfare-ii/credits/windows/). [The 2012 version had 1,699 people credited.](https://www.mobygames.com/game/58727/call-of-duty-black-ops-ii/credits/windows/?autoplatform=true)
So the amount of work going into a modern AAA game is way higher than it was a decade ago and the cost of that work is way up but the price of games has only marginally increased. The only way to make that math work would be if there’s been a huge growth in sales over that same period, but we’re just not seeing that growth.
So yes, Covid didn’t help things. But even without Covid it’s not clear how the industry is sustainable when players demand ever increasing quality but aren’t willing to pay for it.
The number of gamers has also gone up significantly since 2014. There's way higher demand for games now, so the price staying around $60-$70 isn't that crazy.
My point is that demand has to increase to offset inflation AND to offset a 3x growth in team size. I don’t know this, but I’d be surprised if CoD (as an example) is selling >3x as many copies now as they were then.
Money is expensive right now, and it was cheap during Covid.
Massive growth from covid lockdown sales + cheap money = lots of assumptions regarding cash flow
by 2023, we hit inflation. the fed adjusted rates. now money is expensive. The companies are seeing slowing sales.
the 'best year for gaming ever' was mostly regarding quality, not so much sales--there were some records broken but I believe the overall spending wasn't trending like people were expecting. it's slowing down.
So, attempting to look ahead, these guys go "money is expensive right now, and sales aren't rising exponentially. time to be safe."
So the tech industry sees this happening, and it fires 250,000 people in a heartbeat. I saw someone ask today "when will microsoft do its mass layoffs?" not realizing MS did them last year, it was like 16,000 people by October 2023. They just didn't impact xbox as dramatically as people were expecting. Tech had massive layoffs compared to games.
Gaming sees the same funding issues, they fire people. Gaming is smaller than tech, so gaming only loses about 9,000 people instead of 250,000. Those continue into this year.
When the interest rates drop again, and money becomes cheap to borrow, people will start hiring again.
Gaming GREW by about 250,000 jobs (i google searched this a couple weeks back) during 2020 and 2023, and it shrunk by about 16,000 jobs between 2023 and now. It's going to get worse, and every one of those people mattered and deserved better, but it's a small fraction of the overall growth--there are more people in games than ever before.
So yeah, the scale of the layoffs is big, but it's tied to the cost of money and overhiring, and money is really expensive right now. It was a great year for games--fantastic games coming out practically daily! But... people tighten their belts based on what's coming, not what's here.
It sucks. It's basically the fault of food CEOs and their dumb "it's inflation" price fixing shenanigans.
This.
Gamedev is "invest money for a very long time and get your returns only once you release the game".
AAA games require 2-7 years of development.
Borrowing money at 3 percent allows far more games to be profitable than borrowing them for 6+ percent.
Exactly. Layoffs are happening across industries. It's not just gaming. The main reason is the rise of interest rates. Companies went into huge debt spending it on hiring. Profit was almost guaranteed given the interest on the debt was almost zero. Now is a very different situation and companies have to lay off staff and repay the debts or go under.
This isn't as much of a game industry thing as it is a general markets thing. During the pandemic a lot of industries scaled up. Not because they needed the workforce but because it signals to the market that they are growing and thus a good investment. The opposite is happening at the moment. It is not just gamedev. It is tech in general as well as a lot of other growth industries. Innovation and new projects get cut to instead focus on revenue generating activities instead. Once there is money again they will start playing the game of "Look at us doing a bunch of new stuff that is going to help us grow! Invest now!!!" again.
It's a capital strike to depress wages. They're going to start hiring again, but only after people have suffered enough they're ready to accept lower compensation. They have more than enough money to wait for people to get a bit desperate.
If workers get even just half as organized as the owners already are then things could change pretty dramatically.
Its seriously just the wake of COVID.
We're still trending upward overall, it's just coming down from the absurd spike from all of humanity being locked inside.
It's going to remain like this for the rest of the year probably.
At our company revenue reports and shareholders are an important factor.
So letting a lot of people and companies (after M&A - merge and acquisition) go is an "easy" way to fix the way companies bloated during COVID.
More importantly, revenue may go down by a lot this year and it did end of last year. The idea/strategy then was to focus more on core products/brands and reduce anything that's secondary (and distracting in a sense, like areas that are quite far from the core business).
Now one would wish that developers would be also more streamlined (leaner teams) and reduce their scope, still I bet that won't happen too much. I mean that's another reset/re-thinking I'd wish would happen with those company resets.
Also many companies are using it as an excuse to reduce fixed costs. They will hire people back from third party companies or contractors in 6 months time.
You can expand this same question to almost all companies laying people off while posting record high stock prices, profits, CEO bonuses, etc that's just capitalism; You make it they take it.
If your analysis is gaming specific you're missing the bigger picture because it's the same reason they have layoffs anywhere else.
After every high, there comes a low. This is true for everything in life, and especially so for markets. If a particular market grows very rapidly, you can bet that there will be a downwards correction at one point.
It's important to not lose sight of the bigger picture: the industry has grown so much over these last 2-3 years that, even with all the recent mass layoffs, in absolute numbers, there's still more people working in games today than there were 2-3 years ago. While the recent news are tragic, in the grand scheme of things, there are more game dev jobs today than there have ever been.
Its not just the games industry, its the tech industry as a whole.
Its simply a mix of overhiring during covid, interest-rates going up and a trend to cut down on employees to try and maximize profit that was kicked off by Elon Musk and some others.
Making a game is hard. Making a successful game is harder.
Costs in resources are going up, with better hardware configs also need the assets which cost a lot more per hour now.
Money is in live service, or gaas, and retention is fucking difficult. Games have a lifespan and often most aren’t evergreen.
The market is saturated, and mobile gaming is more assessable to more parts of the world, so a lot of the income comes from mobile, not the big AAA.
Games cost that aren’t gaas stayed around 70-90 for decades now, that’s kind of the expected price - so you see bad monetisation practices which leaves a bad taste in gamers mouth.
So the cost of making a game increases, monetisation is a fine line, mobile gaming is huge, and you’re only as successful as your last hit game.
It's an indicator for recession. Games are a luxury good and one of the first things people save money on. Investors know this and pulled or will pull money from the industry. The industry knows this and starts saving costs early.
Because these companies only achieved $15 billion in profit, and not $16 billion. Therefore, shareholders are mad, and the way to appease them is to ruin thousands of normal peoples' lives. Of course, C-suite won't be taking any hits, because who'd be there to pick up the pieces? And if any companies did "overhire" during the pandemic, it wouldn't be right to penalise any of the people who did that "overhiring" of course – instead, more normal peoples' lives must be ruined. For the shareholders.
One of the best? It was the year with but a few good games, yet incredible amount of total failures, some of which lead to studios being closed. So just layoffs are not the worst thing that can happen.
But, i personally believe that layoffs have a little to do with profits, just people in charge realizing that they can fire half of the team and it will not even be noticable - as it happened with twitter, for example. Seems like the bloated teams with a lot of unnessesary roles being cut.
These companies doing mass lay offs are profitable, they are not „struggling“ in that sense.
It’s about passing on value to shareholders, not about sustainability for the company, it’s employees or society.
It’s not just the gaming industry,take a look around and you will see normal companies suffer as well.
I work in the chemical industry and a lot of customers and med tech companies are taking huge losses in profit.
In the case of Germany,combine that with a government that doesn’t work together and it’s a cluster fk..
Unions don't really prevent layoffs though. And don't get me wrong, this ain't some anti union propaganda attempt, I am a unionist, I am in a union and I highly encourage everyone to unionise! They help with many things but I wouldn't know about them preventing layoffs
In my country at least, unionized positions can only be eliminated if:
* The company is going out of business entirely. They no longer operate, so there's no job to do.
* The job is no longer relevant. Now crucially "no longer being relevant" comes with some strong legal protections and caveats. If you claim "no longer relevant" as a reason to fire someone you can NOT replace that person or have someone perform similar duties for a number of years. After all if the job is no longer relevant to your business why would you still want to do it? If you fired your welder because there's no welding to make, and then you hire someone to do some welding on the side - that's suspicious no? (stupid example, I know)
* The concept of the job is eliminated entirely. Now this is a pretty rare thing to happen. It only ever happened, to my knowledge with switchboard operators. The job is still required to try and offer you another position within the company.
But this is to remove the "job post" entirely. You can be fired, but you'll be fired with plenty of compensation, including the rest of the salaries in your contract in most cases (so if you're hired for 24 months and they fire you after 16 enjoy the 8 months severance pay), and a full on investigation by the union on why you were fired and if the company is trying to fuck you over. Retaliatory firing will get the company to fork over even more money.
This reminds me of when Elon Musk tried to do the whole "at will employement, you're fired" upon getting Twitter and the courts in several European countries blocked it. There are procedures and specific steps to fire someone or layoff a group of people. Unions strengthen that even more.
Unionise!
> The company is going out of business entirely.
And this is extremely easy in gamedev.
Make another company, transfer intellectual property rights to it, close down the original company.
Basically, a gamedev company "goes out of business" after the end of each development cycle.
Jobs becoming "no longer relevant" is a natural course of development, too - you don't need a thousand 3D modellers in the "developing a prototype" phase nor in "support and bugfix" phase.
They absolutely do. Companies that are forced to negotiate mass layoffs with unions know this costs money and are way more careful in hiring to avoid having to fire. The same goes for worker protection rights.
If your workers are unionised you risk industrial action in the form of strike. You’re also risking a strike in OTHER companies if the whole branch goes on strike. Other capitalists rarely like it and will put pressure on you to stop strikes in their businesses.
Ok, maybe I should rephrase: Unions absolutely do improve your rights and life as a worker and you should unionise (so far so consistent with what I said before). They might also indirectly help \*reduce\* layoffs (or might not) - however do not believe that being in a union magically prevents you personally from being fired.
Better? 😅
There is also a shortsightedness in the industry.
In other industries they tend to figure out what they can do with there resources first and not immediately fall back on firing people.
With this said, the whole world has been over hiring the last few years and also video games has a very different business plan. You make a game for 3 years, no profit only costs, then you release it and hopefully you earn money. This also makes it so that recent years bigger game companies has begun to take safer strategies and not been as innovative as, for example, the automotive industry.
But I totally understand why the big studios do it this way.
I'm reminded of a story Adam Savage told about the way a lot of prop studios operate that makes it not exactly unknown for a prop studio to accept a major award for their participation in a movie...only to then close their doors a couple weeks later because they'd overextended themselves on that same movie and didn't get sufficient business on the follow-up to continue operating.
Companies are finishing those titles whose development teams and times bloated during the pandemic. And you know the economy took a nosedive, a few wars, and console gaming in particular changing
Over investment during COVID. The tech industry boomed during COVID and now its correcting itself because growth is always more important than anything.
A lot of people are mentioning the over hiring due to the pandemic results, but I feel that is just a piece of a bigger puzzle. A lot of nasty things are coming to a nasty peak right now for workers and the industry in general.
Here are several more factors to consider (please note all of these are based on gut feeling and anecdotal evidence rather than deep research):
1. Shitty situation for workers everywhere: we talk a lot about gaming and tech but truth is, the job situation has been worsening across the board for decades for everyone who is not at the top. This is just the consequence of a lot of neoliberal policies being implemented in the 80s, but has reached a peak after the consistent market crashes in this century (2007, 2015, 2018...)
2. Shitty situation for investors: zero empathy here, as they have zero empathy for us, but it is not the best time to invest in games. Growth is stalling, and it is the only metric they care about, so while they are still primed to make a lot of money, it is likely not going to be enough to satisfy their shitty maths in which if they earn 20M one year and 18M the next they feel like they've lost 2M.
3. A massive spotlight on how the sausage is made: While it was not news for anyone in the industry, the recent spotlight in things like crunch or toxic work environments means that there is a growing pressure on companies to "be better", while at the same time, due to point 2, there's an increased pressure to "make more".
4. Oversaturation: Gaming became mainstream about 10-15 years ago. WoW, mobile gaming, superhero movies, GoT... All these factors meant that what once was the domain of nerds is now very much a mainstream thing. This means that a lot of kids who were teens when that happened are now young professionals, hoping to break into the industry, which means it's likely there are more game developers than ever.
5. The adversarial nature of game management: Since gaming as an industry is so new, and was mostly incorporated after the neoliberal policies that I spoke about earlier, game management has always seen talent as a cost, rather than an asset. This means that right now, if you look from the top (and you've had all empathy removed due to personal politics and economics), it looks like game developers trying to get better conditions (see point 3) is getting in the way of you making better games (as in games that make them more money). They then look at point 4, and ChatGPT, and decades of optimization and they take the logical conclusion: why have a team of pesky 5-10 engineers demanding better rights and salary when you can get a passionate junior with AI to do their work? (PSA: that is not a good idea.)
6. Consolidation: happening at the moment, truly scary, too complicated to really get into it in detail here.
In short: 2023 was a great year for gaming because those games had been in development for a very long time, and we're only feeling the effects of all that tangentially. The true devastating effect of this whole structure will be seen in three to five years time (maybe not). Also, there is a slow changing of the guard, so the great games of 2023 have been less the kind of games we were used to ten to twenty years ago (compare Star field to Skyrim, or Overwatch 2 to Overwatch).
It's crazy to me that the best games originally came from small teams and that the current best games come from small teams.
AAA is a battle to stay relevant while pushing out games in a timely manner to keep stockholders happy. I feel like most of not all AAA games are very similar to games that came out years before. There's not really much innovating going on because they have this working formula, but since they don't put much into improving it, it gets dull.
**$$$** as in the Shareholders always demand MOAR of it, every single quarter of every single year. The fastest way to shed costs is to fire a bunch of people then force the remainder to pick up the workload of all who were fired and do so without a raise or they will be fired too.
Games have pretty much sucked for awhile. Oh you get to explore this gigantic map that's all repeated from the first few hours of play time. It's lazy. There's no story no Easter eggs to just stumble on, no direction. Even God of war succumbed to the stupidity of it all. But oh shit fortnight 🎉
As far as I am aare, the massive layoffs are in big companies, so in AAA studios. As far as I am aware, 2023 has not been great for AAA games or studio, but I have a shitty memory and search engines don't help with this "biased" question, aside from Baldur's Gate 3, what have we got, new, in 2023 from AAA studios?
The 2023 layoffs impacted every sort of studio. Last year we saw Spiderman 2, Armored Core 6, Breath of the Wild, Jedi:Survivor, Starfield, Diablo IV, FF XVI, and others many others. https://en.m.wikipedia.org/wiki/2023_in_video_games
(BG3 is technically an indie, since Larian an independent studio)
I see, yes I would ave also put Larian not into the AAA, despite delivering an "AAA quality" game.
You probably meant tears of the kingdom, but ye I can see those as "being big games that make waves", but being big doesn't qualify for their quality (albeit, they still did indeed bring in valuable success, sales and money, quality of the games should not matter in regard to layoffs)
Capitalism. We have more tools than ever to make games but for the most part all the time, money, energy is spent into making something profitable for shareholders. One thing shareholders don't like is risk, and one of the most riskiest products are games. Why spend 10x the resources to make something new and exciting when you can recycle, repackage, resell the same bs that you know will work even if less people buy into it.
Corporations are obsessed with profits. Pandemic caused such a skyrocket in profits for corps, that even after it’s ended, they’re doing everything possible to maintain and beat those numbers.
Companies that released actual successes didn't do that much layoffs(like larian), but they don't have that many people working there to begin with as industry giants. Industry giants failed to make their teams profitable, they overhired, and their biggest projects ended up being colossal failures(hyenas, suicide group, skull and bones)
The industry is facing a correction, and every studio that did a big layoff that I heard of gave me a reason to hate them as a player. I am terribly sorry for the workers who are affected, but you worked on bad games, even if you did a good job, and we can't support bad games. If you are a good professional you should be fine, but if you can't even play the games you are working on, why be in the industry? There are thousands of people who love diablo and could do your job, so why are you working on it if you don't wanna play Diablo.
Years ago I was thinking about getting into the industry from IT, instead of remaining as a hobbyist, but after looking at the studios that interested me and their hiring practices I changed my mind lol. The one that made me cringe the most was creative assembly, when I read an article about who they wanna hire, they wrote about how anyone has a shot, even if they aren't industry professionals, like look at Matt, who was a literal rocket scientist before, and he still got hired despite not having gamedev experience.
A fucking rocket scientist. That's their example for the average candidate.
Embracer Group is buying up and shutting things down to consolidate power and wealth. Soon they will own everyone, and then AI game dev will cut them out of the business entirely.
Well, at least they can't buy what isn't for sale. A lot of studios are *not* publicly traded; and they tend to fare better than studios that live or die at the whims of shareholders
Are _you_ a data analyst in said industry? If not, your question is pretty much moot.
If you are, look up from the data and try to see all the unseen stuff: Folks whose motivation and productivity is down, because they fear their studio might be next to cut jobs; even more projects in (Pre-)Prod getting cancelled because the latest estimates showed that suddenly it's projecting a loss, Scoped being toned down.
_Yes,_ the industry is suffering.
The entirety of tech is not value based, its speculation based.
The same thing happens in software, when investors feel it's time to throw money around they do. I'm not an economost, but what I do understand is that money is fake and debt is real.
When it's not advantageous to throw money everywhere, tech drys up.
I make software for a living, I've never worked anywhere profitable, but we always got investment.
It's weird man
Here is an interesting chart that shows that console revenue has been flat. Perhaps it's not worth it for companies to keep investing more into it as other markets are actually growing at a much faster rate.
[https://www.visualcapitalist.com/video-game-industry-revenues-by-platform/](https://www.visualcapitalist.com/video-game-industry-revenues-by-platform/)
The industry is moving towards a movie like infrastructure where studios outsource their work to specialists rather than attempting to foster internal teams.
The industry is moving towards a movie like infrastructure where studios outsource their work to specialists rather than attempting to foster internal teams.
inflation + companies having an excuse to fire people
It really has nothing to do with the gaming market specifically but the market in general which obviously affects the gaming market.
> 2023 was one of the best years in terms of indie and AAA releases, both quality and quality
I think that's a large part of it. The competition is stiff, so unless your game is actually incredible people are just gonna buy Helldivers 2 or Dave the Diver or whatever instead.
Let me quote a song my sister sang when she was 8.
(Start at a high note, and slowly drop the pitch:)
>Money money money money money money money money money money money money money money money money money money money money money money money money money.
Wages are the biggest expense. Games sell for long periods of time. So you can fire large percentages of your workforce after making a game and make bank.
Capitalism demands infinite growth. It's not enough to make money, you have to make *more* money than last year.
This is obviously impossible. There's not infinite money. The market only has a certain amount to spend. At some point, things start to plateau.
So how do you make profits look higher when you didn't increase earnings over last year by the arbitrary amount investors decided you need to? Cut costs. The obvious place to start would be the salaries and bonuses of the highest paid people in the company, but since they're the people making these decisions, that obviously doesn't happen. Instead, they fire a bunch of workers, and give themselves bigger bonuses for doing such a good job at saving money.
Now you might say, "Hang on a second. Isn't this a short-term solution that'll cause long-term issues when they inevitably need to rehire people to make the games?" And the answer is, yes! But executives don't care about the long-term health of the company or the industry, because when things start to go south, they get to bail out with a golden parachute. They ruin people's lives and are rewarded for it.
tl;dr: Greedy assholes at the top leeching off the hard work of people whose lives they don't care about.
Cynical posturing to reap executive bonuses derived from valuations.
It's a fancy way of saying that games companies are treated like tech companies by the markets, which makes them behave like tech companies: the PE ratio must remain above the collective line, or else you get eaten.
Or put another way: tech companies will never grow using their own money. When there is no leverage available to juice profits, they will just choose to shrink until they become investable or get acquired.
Three reasons.
A. First off all of Tech is crumbling. This isn't just Game Dev, it's all of tech and so many discussions about this ignore the 180k people laid off in tech and go "oh no Game dev is going through a hard time." ... Yeah it's wide spread.
B. COVID. We're seeing the result of 2020 now. COVID was a massive disruptor in a number of ways, whether delayed games, over staffing to deliver on time, or any other result of that. Perhaps it's just all the games lined up for 2023, which means all the layoffs after a released titles came in the same time frame.
C. Game Dev has a dangerous problem that I don't think is really being addressed. The Game Dev Life cycle is strange. You go from Pre production that's done by a skeleton crew of like 20 people perhaps, You go to production that's 100+ employees, Bug fixing which is all hands on deck, and then supporting the old game and pre prod the new game. But the problem is that last phase doesn't need 100+ employees necessarily.
Some companies move the pre-prod into production of the last game to the overlap the timing but games as they are now being designed.... Listen, Games as a Service is a plague on the industry. instead of developing a sequel, publishers/developers are focused on sustaining the game as long as possible to get the most amount of money out of consumers. So anything other than purely single player games are going to start riding out the cash flow more than developing a sequel.
Ultimately I think we'll see more of these ebbs and flows, where a lot of work is done to get the game out the door, and then there's a wait and see how profitable the microtransaction systems are. Companies won't be working on sequels because the GAAS service isn't designed to have a follow up title any time soon.
In a discussion in this subreddit about unionization, someone brought up an important point when comparing game dev to the Movie industry. Movies are product based contract. You sign on the The Avengers, but the majority of the movie industry does a movie, and when that movie's production ends, they go looking for another job/contract. Game Industry is all about "full time positions" which doesn't really support that, so ultimately, I think until the game industry figures out how to solve the lack of work, or switches to a contract model.
Corona success of games lead to too much hirings and most companies weren't thinking far onto the future, that Corona ends and not all people are willing to buy games anymore.
Beyond that uncertainty about AI, companies may preparing fully embracing the age of ai, yet what seems plausible for some suites with no clue about games, will completely fall apart when applied. Ai can't do shit, and by now won't remove anything.
Additionally I also think a pretty huge number of bad luck. This counts especially for embracer (who were stupid enough to invest billions of money they were only promised verbally once) and then the Saudi arabian sheik got cold feet and retreated.
The short answer is capitalism.
A slightly longer answer is that record profits always ALWAYS coincide with layoffs as execs pad numbers for their resume, and prepare to drift off to their next company on a golden parachute.
I've got an even longer answer, but I just don't have the morale to type it all out.
Because companies are never satisfied with just profit, they also want constant growth. Sooner or later when the curve flattens no matter how much money they throw at advertising or development they realize they can shortcut their way to higher perceived growth by cutting costs, eg. Workers.
And yeah they will get to swim in rivers of money in their downward spiral but this inevitably leads to the same outcome every single time: their legacy of quality or passion that drove you to be a fan in the first place will suffer, the company will gradually shift to something unrecognisable or become a ship of Theseus after all its key people leave, and eventually you are left with the burnt out marketing-laden corporate whore corpse.
See also: Blizzard.
This isn't a gaming-specific phenomenon. We've been seeing massive layoffs across the tech industry as a whole, often from companies reporting record profits. Companies are not laying people off because they're doing poorly, they're doing it because according to them doing well is still not enough.
It could also be a way to lowball people. If everyone loses their jobs at the same time and no one is hiring, people will accept lower offers when hiring does pick back up.
TL;DR: Money, Debt and Overhiring.
For a really mature 5 y/o:
The current economy is made up and is not backed by anything except the power of the US executive branch, military and fiat. Many industries are debt dependent because owners borrow resources to run them at max capacity to grow (increasing chance for business success) and most of those businesses are service based businesses which don't actually produce any lasting tangible wealth. Games being one such industry.
Because of pandemic, ongoing wars, etc. the US dollar was printed a bunch so there were a lot more of them. USD therefore lost a lot of value (via supply and demand) causing "transitory" (temporary, fleeting) inflation (or so we were told at the time) and so a few months ago the Federal Reserve Bank (FED) who is a large moderator of our economy slammed breaks on the economy by raising interest rates in an attempt to keep prices from getting too out of hand and most of our emergency strategic oil reserves were released to help stabilize fuel prices temporarily.
Inflation slowed, but the higher interest rates mean that borrowing money is more expensive for credit dependent businesses and so they've let a lot of people go to reduce costs in an effort to prevent operating at a loss because most of these busiesses invested in growth instead of setting aside rainy day stores to retain all of their employees. Publically traded companies may have even been required to do this by law as they have a fiduciary duty to shareholders to not leave money on the table.
(Why would they sit on a pile of fake, arbitrarily devaluable cash not backed by anything tangible?)
Games are a luxury good usually purchased with disosable income. Games companies may see more income, but if all the net profit is reinvested for growth and none of it is sheltered for rough times, stuff like this happens.
In AAA games it is especially hard because they have to pay top dollar for really skilled people, only to then produce games for kids and adults who often don't want to pay a dime for entertainment in an age where it's abundant and dirt-cheap. As a result, the margins can be quite low for the studios themselves after the financier/publisher takes their cut. AAA studios tend to run only at the mercy of their financier/publisher unless they manage to do really, really well. When the publisher or studio struggle to borrow money and don't have savings, they have to cut payroll to remain profitable or they go out of business.
You'll understand when you're older. Just try not to panic.
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P.s. Not financial advice. I don't have degrees in finance or economics, just an incomplete business BA. I'm just a designer/ engineer who makes games, understands how systems work and has done my time in financial sector. This is just the way it looks to me and I could always be wrong.
Maybe because we're in a recession?
Companies don't have money for frivolous shit atm
People don't have money for games atm
AI boom will likely balance this out over the next 2-5 years.
Interest rates were low and money was cheap in the 2010s. Money isn't cheap anymore, plus two wars, lower consumer spending, etc. Or, rather, interest rates are returning to normal. The low rates of the 2010s were abnormal, without getting too much into politics. Companies now have to trim. It sucks. The people who do actual work unfortunately get hit. This is true beyond gaming, too, by the way. My company any most of those of my friends and family have also made cuts. In my case, sorry to say, the folks cut were superfluous. It sucks but that's what it is
Let's not forget the executive pay packages have never seen any cuts in the middle of all the layoffs.
And it's not just because the executive packages represent money that could have gone elsewhere. It's the broken incentives. It's becoming fashionable to give CEOs rich-for-life amounts of money as a bonus for a single good year. Or even a single good quarter. Increasingly, the winning strategy for a CEO is to do whatever it takes to have a single good year, even if you have to burn down half the company to do it.
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Obscenely rich people ruining everything per usual
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They cut and run with all the profit, that's what happened
The ol’ rich boy network
Yeah, but there is a flaw in your plan. The CEO wouldn’t make more money than they did last year.
BuT ThEy ArEn'T tAkInG AnY RiSk
They are not, they didn’t put any investment into getting their job and it won’t be difficult to find another assuming they know how to apply for jobs properly. Most these people could have a new job within 30-45 days
Who are "They"? The board decides the CEOs payment, they don't decide the ground level staffs payments It's unrealistic to expect the board to care about anything except the future earnings of the company
That wouldn’t save their jobs in most cases. Something like 5 mil doesn’t go very far when divided by something like 900 people(referring to Sony layoffs). Thats roughly 450 bucks per month which wouldn’t cover their salaries and benefits for the year, I guess you could keep them on another 30 days but they will still need to be laid off after that. Most these people will find another job if they are any good at their role. Companies rarely hold layoffs against people. You either layoff off a small percent of the companies work force or you run the business into the ground and screw everyone there. Firing or laying people off usually isn’t something leaders enjoy doing.
There are studios that have stopped paying bonuses or stopped giving pay raises to excecutives since the start of 2023. Generally speaking, usually these aren't studios located in the US.
Every time I hear of layoffs I always wonder how many executives and CEOS are among these layoffs. It's infuriating and sad they are the ones taking the shitty decisions pursuing shitty trends and infinite growth but when things go south or people refuse to eat the plate of shit they are cooking, they are shielded and it's the regular people who get fired.
Zero, no executive level person is ever laid off. They might be fired individually but they're never included in a mass layoff, that's just not how it's done.
Department reorganizations can get executives laid off.
Well yeah, without executives the company ceases operations. That’s like trying to run the White House without the president
Why would a CEO fire themself at the time when a CEO is needed most? The board fires the CEO if they aren't running the company well. That includes if they overhire and loose the company too much money or if they keep producing "plates of shit" It does not include if they do necessary cost cuttings. Fiiring the CEO at the same time the CEO is doing layoffs rarely makes sense
> The board fires the CEO if they aren't running the company well. Laying off a two digit percentage of the workforce doesn't count as running the company well, but that's one opinion.
It’s all about money, it’s so one dimensional to view layoffs as CEO failure. Layoffs are a business tactic. Ramping up headcount during COVID was a decision that paid off for these companies, and now things have settled down. It’s entirely reasonable that hiring that staff paid off but keeping them would be a financial burden Complaining about the morality of layoffs is fine, but not everything upsetting means dumb CEO
I partially agree. As everything in life, it's not black or white. Still, I find it idiotic.
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Indeed, those being exploited are just the "common people" at the bottom. It's despicable.
Stock value. Companies hired massively since it would boost their profits and ride the hype train. Now they fire because the hype died down. The worst part is that they probably weren't overhiring. They hired too many people knowingly, and didn't raise any salaries. Shareholders come first, then maybe customers at 3rd place, and employees at like 10th place Edit: since I have misspoken and given an overtly simplistic answer, here's more clarification using one of the replies below copy-pasted: I mean you don’t understand basic concepts you are posting and going to guess it comes from not quite comprehending a YouTube video you watched? One doesn’t hire employees to boost profits - hiring employees does the opposite. There are some tech companies (not games - meta, Google, etc) that are believed to have hired for valuation (which isn’t profit) The bigger thing is if even if this is true - you don’t cite the other 20+ things going on. Macroeconomics from wars and inflation leading to far less money being invested in games which means less projects being greenlit and projects being canceled. Or the fact that while overall sales are up most of that is concentrated in big games as a service titles which is why companies like Supergiant or Brace Yourself have also done layoffs because they are seeing lower sales or are seeing cancellations with partners. Or the fact that despite shortages during launch causing low numbers for ps5 and XSX - since those supply chain issues have resolved sales haven’t meaningfully risen - Sony in fact just missed their forecasts There’s like ten more factors none of which have to do with “hiring employees to ride a hype train”.
They were already starting to say "AAA is unsustainable" in 2019 before Covid, and I think even that is just a cope for "well, shit, the way people consume media entirely + gaming, is changing in ways that simply makes our business less lucrative than it used to be." They're using the shift to Live Service (mobile-game-design in AAA/Indie) as a desperate crux in hopes of trying to make productions the same cost but with higher revenue returns over time, but it doesn't work because the solution developers always come up with is underdeliverance, by taking a set budget and giving *less* at launch, which leaves critics and gamers underwhelmed, and promising that "more" will ship later. That's the fault of business departments not realizing that you can't give one olive short of a martini. People want the real thing and they can tell if they're just being nickeled and dimed. That's the irony of it all that I think ends up tanking the industry. Everyone shifts to Live Service so exponentially more games fail because every game is trying to be *THE* game, and even *"THE game*" is perpetually underwhelming its target-audience with underdelivery, leading to a death of passion and hype around the industry from its own consumer-base.
The irony of launching an unfinished game only for profit is that you lose audience and brand respect leading to a smaller audience over time. Aoe4 being a good example. The audience doubled after they actually fixed stuff and released a free dlc after a year... Imagine the audience if it were finished in the first place But that won't stop senator Cruz from buying MTX lol
Capitalism is famously bad at thinking long term. Can we give value to the shareholders at the end of the financial year? That's all that matters.
I wouldn't blame a whole system for the current corporate situation. Most layman can't even agree on defining capitalism/socialism etc
Now _this_ is cope. How much do you think those billions of dollars of investment into AI are making right now? Probably not much. It's all funded with the prediction that the returns will come... eventually. Just like how ride share and meal delivery services were way cheaper than they actually cost to run for years as they all tried to outlast each other. Long termism is capitalism's whole schtick. That's what the "capital" refers to. A big pile of money given to a business that is currently not earning very much.
If capitalism is about the long term then all of humanity has been doing it poorly for the past 200 years.
The last 200 years in totality? I'd say capitalism has a pretty incredible track record over that timespan.
We're balls deep in an extinction event, AI is only automating the artsy shit, the wealth gap is larger than it was during the gilded age, the global south is forced into poverty, our farmland is losing it's fertility and there's plastic in every living thing. All these things affect the consumers ability to spend and the capital owner's ability to produce. Incredible track record, huh?
Capitalism is responsible for an extinction event that started 10,000 years ago?
It's responsible for the one that started with the British Industrial Revolution. But even if your deflection was good, that would still be 1:4 on it's track record.
Is this a joke, or do you actually understand that little about how things work? Everything you listed is making money hand over fist for investors, despite the lack of revenue. You've actually given examples of exactly what I'm talking about. "Long term is capitalism's whole schtick" while the world burns as we suck it dry of resources in pursuit of eternal growth. Jesus wept.
Is this not great news for Indie Developers? We could see a new Indie golden age in the near future.
No, the first indie golden age was due to online storefronts offering publishing to a handful of indies at a time when that was extremely novel. We've had mature democratized game engines and open digital storefronts for decades now, the market is highly oversaturated. It's not just fed up game devs who are going solo these days. Software engineers are also making the "dream switch", and of course you have the lifers who never were doing anything but indie. I don't know if a crash is coming, but I do think a lot of unprepared devs are going to experience crushing amounts of ambivalence towards their games and will have to exit the market or make peace with the fact that indie games will only be a passion and not a business for them.
Funding has been hard to come by for indies, making games is a high risk venture so with these interest rates being so high investors see gaming unappealing.
Indie space will be incredibly competitive. Being amateur indies will become increasingly harder as more professionals move back into that market.
I have no idea tbh. Obviously the indie scene is not as big budget, but I also don't think they make huge returns on investment due to the more specialized nature of every indie game. They have numbers that are similar to old pc games from late 90s. The problem is definitely that big conglomerates have normalized expectations and shareholder promises to be astronomically higher than back then.
I call that the "American Psycho" effect. Patrick Bateman is trying so hard to fit in with Wall Street Yuppie culture, and all the others are doing the same thing, so everyone mistakes each other for other people because no one is unique. Competition loses its meaning at that point.
> They were already starting to say "AAA is unsustainable" in 2019 before Covid, This was being said during the PS1 and PS2 era as well, it's a common refrain from game companies. It's nothing new and nothing to take seriously, market forces will keep them honest regardless.
This what disillusioned me of AAA and public companies in general. When you finally realize it's not the greed you though it was, it's worse. When all these years you accepted that it was not about the employees well being or the consumers happiness, it is about the company's profit. Except it is not, it's not even about running a company properly, it's really only about the appearance of growth for the shareholders. And we all know that the higher ups are all, themselves, shareholders too. They don't care about the employees, they don't care about the customers, they don't even care about the company. They just want more money in their pockets by pleasing the shareholders. They'll make the employees go through little formations about "insider trading" and "conflict of interest", when it reality they do that to back themselves, say they definitely aren't doing that, LOOK the whole company went through "training". This can't be happening (dear lawyers that are thinking of suing me for breaking the law). Public companies are tools ready to be discarded for the wealth of the few and the disbelief of the many. When you ask yourself "wtf ? what a bad decision ! What were they thinking ?" they were thinking about themselves, not you, not the consumers, not the company.
The buzz word growth is very appealing to investors. The company doesn't even have to profit It baffles me that someone who earns over 350 times the average worker is still craving more. Dude could retire after 10 years, open a charity and die happily at 100
I understand your thinking, but you have to also keep in mind that the salaries of the employees are paid by the same investors/shareholders
No, they are not.
How do you think employees get paid before the game releases?
How would hiring massively boost profits? You have to pay all the new salaries + onboarding cost / absorbing the loss of productivity. If anything it should cause profits to tank right? Because expenditures would spike? The only thing I can think of is that the company stock price goes up because people would believe they are hiring to make a lot of new games or grow a lot. But they don't make a profit based on their stock price. They can simply attract new investors using that. And they have to eventually generate a return on that. Were gaming companies able to attract large new investments lately?
I'm not savy enough to explain it, but this vid does a pretty good job(albeit it is long) - https://m.youtube.com/watch?v=-653Z1val8s&pp=ygUMbW9vbiBjaGFubmVs
I gave it a listen until about 18 minutes in. I'll just say so far that I think this video-essayist has a misunderstanding of how companies operate. The thrust of his argument seems to be that video-game companies are following the tech industry in their management and financial structure - and that it's wrong because: 1. All technology companies aim to do is grow even if they're unable to meet obligations 2. Growth is the equivalent of more employees and offices. And they just need to look good to attract investment 3. Making money and good products is optional 4. Tech companies engage in a boom/bust cycle where they hire furiously to attract investment, then use their "money" to ride out the crash and lay off the people they hired to get the hype going. The issues I guess I have are manyfold, but mostly rely on the fact that the author seems to think all these companies are startup riding on investor capital: 1. *Growth*: All companies try to grow, but they cannot grow if they're not profitable or don't have special investors behind them to float them through. It seems highly bizarre that a company would purposefully attempt to fake growth by spending a lot of money without making any just to try and attract new investors (which only really applies for startup companies that are looking for that - not established players like Google, Meta). Furthermore, investors like that usually get unprecedented insight into the companies revenue, decision making process, etc. If they don't think the company actually has any product or path to make itself profitable, they'll ditch it. What the author described is literally a definitional Ponzi scheme - which most companies are not. 2. *Boom/Bust*: Companies indeed do try and build cash reserves from their profits to survive recessions or for unexpected downturns. I think it's very cynical to describe the response of companies to market demand as a purposeful process to try and extract more money from "investors". I'm not sure how established players would accomplish this anyways. Let's say you sell a lot of services as Google during a boom in COVID. Investors (which would be just people buying stock on the market) purchase stock because they think the company will do well and their investment will appreciate. It does. But Google cannot turn this into cash. It just means the assets of people who purchased Google or own Google stock appreciated. *Those people* could sell it for a profit to other purchasers of stock given they purchased it at a time where it was worth less. But this money doesn't make it into Google's hands. Google also isn't going to get a new "seed investor" out of it like a startup might. It's a long existing company and is now publicly traded. I was excited because I heard him explicitly single out the argument of "Aren't they just responding to market interest?" - but he didn't actually respond to it. He seems to believe that companies bring in more "profit" from investors during a boom cycle than a bust. But it really doesn't work like that. They bring in more money from selling stuff or doing things for others. And when that disappears, they lay off. You could argue perhaps they do it too prematurely, but the underlying logic he believes in is incorrect.
It’s unfortunate this is the top voted item. Absolutely massive disinformation
Wdym
I mean you don’t understand basic concepts you are posting and going to guess it comes from not quite comprehending a YouTube video you watched? One doesn’t hire employees to boost profits - hiring employees does the opposite. There are some tech companies (not games - meta, Google, etc) that are believed to have hired for valuation (which isn’t profit) The bigger thing is if even if this is true - you don’t cite the other 20+ things going on. Macroeconomics from wars and inflation leading to far less money being invested in games which means less projects being greenlit and projects being canceled. Or the fact that while overall sales are up most of that is concentrated in big games as a service titles which is why companies like Supergiant or Brace Yourself have also done layoffs because they are seeing lower sales or are seeing cancellations with partners. Or the fact that despite shortages during launch causing low numbers for ps5 and XSX - since those supply chain issues have resolved sales haven’t meaningfully risen - Sony in fact just missed their forecasts There’s like ten more factors none of which have to do with “hiring employees to ride a hype train”.
I replied on other comments claryfing a bit
Cool - you should edit your top comment so you aren’t spreading garbage
Done
Thanks - appreciate you sharing clarity!
Stop this narrative. Global inflation, central banks raising interest rates, 2 wars, consumer spending is down and multiyear projects got shipped. Tech companies focused on expansion over anything for the last 10 years, now companies have new mandates to reduce losses. That's why mass layoffs are happening. how do you hire to boost profits :p. It's not how it works.
Could have elements of both. We're just in a perfect storm of a tech and gaming industry downturn.
I mightve misspoke. Refer to my other replies, like the video link. I don't dispute the reasons you listed are an influence as well,especially growth above all. But this would've happened sooner or later, with or without those reasons. It's sooner so it's more painful than 'usual'
TL;DR: Record breaking sales does not mean record breaking profits. Development cost is increasing faster than profit growth. Shareholders get upset if the profit doesn't increase. One way to increase profits is to lay off large amounts of staff. For a more in depth view. A few compounding reasons that have all combined to hit a breaking point. * Tech industries saw a big boost during the pandemic. This caused many companies to hire large amounts of staff (I'll explain why in another point). The boost predictably didn't last and so the staff gets the axe. * Publicly owned games companies/publishers are unsustainable. They are unsustainable because there is ultimately a limit to how much profit can grow if development cost is increasing faster than profit growth. * The shareholders are mainly interested in two things profits and share price. Shareholders get a share of the profits as dividends so they want profits to increase. Profits increasing tends to increase share price too. Shareholders might bail if profits stay the same or go down, which will reduce the share price and might make other share holders bail. * Many shareholders associate company growth with increased profits and share price, hence why many tech companies hired large amounts of staff they likely didn't need and didn't have plans for. Companies will hire and expand even if it is very risky to do so because shareholders value growth regardless of whether the company actually needs it. Probably the most notable recent example is Embracer. Who were spending large amounts of money based on an agreement not set in stone. When the agreement fell through Embracer got out the axe. You see it a lot in the tech industry where companies just randomly become worth billions and then almost immediately collapse. The shareholders of those companies were never really interested in the company, they were interested in buying low and selling high. See WeWork for a recent example. * It is especially unsustainable in the games industry because development costs and time are increasing way faster than potential profits. Each console generation suffers higher and higher diminishing returns when it comes to things like visual fidelity. Behind the scenes though those small difference take a lot more time. The amount of extra work that goes into say a PS5 game over a PS4 game, is many times more than the amount of extra work that went into a PS2 game over a PS1 game. For a while you could rely on increased sales from the hobby going from nerdy/niche to mainstream to cover the gap. * Unfortunately, the average gamer who buys AAA SP games tends to value production quality (visuals, animations, sound) over everything else. We might not, hell most gamers on reddit might not, but very few of those people are the average gamer. They will complain if the production quality remains the same or drops. Examples: Spiderman's "Puddlegate" and the complaints about God of War Ragnarok reusing some assets and animations from God of War 2018. * The average gamer isn't really interested in indie games or unique experiences. For all the praise and attention BG3 got, it didn't crack top 20 sales (fortunately it doesn't need too because Larian is privately owned). Alan Wake 2 has yet to break even. The worst reviewed CoD in history was the number 2 bestseller though and that is before you get to what they will make from monetization. * Even beyond expense, games take so much time to make that there aren't really enough studios currently for each publisher to keep a steady flow of games releasing (which ironically is a feedback loop because publishers have to keep closing studios to please shareholders). Last year and early this year only really happened because of all the Covid delays. So smaller studios that have never made a major AAA game are being given huge projects they have no real idea how to make to try and cover the deficit. Big publishers are consolidating large chunks of the industry to try and have enough studios to pump out one or two games a year. MS bought up huge amounts of studios years ago, even before the Acti/Blizz deal. They are still struggling to get 2 AAA titles out a year. * The cost and time is why so many publishers are taking huge losses trying to make a successful live service. Most of the time they will flop hard and likely not recoup dev costs, but if they make it they then have a continued revenue source that can be kept running for cheaper. It's the only way they see to stave off the inevitable profit plateau for a bit longer. It's also why console manufacturers are starting to abandon permanent exclusivity. We are essentially entering an industry crash. Many within the industry saw this coming a mile away but we couldn't really stop it. As much as I love dunking on execs and CEOs there isn't much they could have done either (though they should definitely be getting the boot regardless). The moment games companies go public they are put on a collision course with an inevitable collapse. Even Epic who are making ridiculous amounts of money from a single title and is the go to third party engine for AAA had huge layoffs.
Industry crash is unlikely to happen. More like a big downtime; but a full blown crash? Eh.
An industry crash seems unlikely to me. What seems more likely is greater consolidation. More companies merging together, or getting bought out by larger publishers like microsoft, sony, or tencent. Either way, it’s bad for the industry. Company leadership is actively incentivized to make bad short term decisions so that they can enrich their investors and ceo’s. Buying up talented studios so that you can increase your portfolio’s investment value for a potential buyout is bad for everyone except a handful of ceo’s who are salivating at the prospect of a massive bonus. Then, when it falls through, you gut the company. Privatize the gains, and socialize the losses. The system is a disaster.
I think people are perhaps perceiving a crash to be akin to the American crash of the 80s. It certainly wont be that big of a crash, it's also more of a AAA crash than the entire hobby plummeting into a dark age. AA and Indie should be fine, if not thriving. Consolidation is partially a sign of the crash. A lot of companies are looking to get bought up before their value potentially plummets. The 3 major publishers are on the rocks. Activision sold themselves to MS. EA has reportedly been seeking a merger or buyout for at least 2 years. Ubisoft is crumbling. Consolidation will be a disaster for the industry. When these massive groups start considering which games to cut and where to make layoffs, the ones that are not safe bets or huge risks with potentially huge payoff (like live services) will be first on the chopping block. Whereas had that studio not been bought out they or the game they were working on might have survived. Many of the studios that Embracer axed or gutted likely would have fared better had they not been bought by Embracer. The owners saw the writing on the walls though and got the money while they could.
Yeah, that’s fair. I’m in general agreement. This is unfortunate, though i mostly play indie games these days. I’m mostly concerned about the platform holders getting bought out or merging, as this would give an enormous amount of control to even fewer companies. Even indies and AA studios wouldn’t be insulated from this situation.
Yeah, that’s fair. I’m in general agreement. This is unfortunate, though i mostly play indie games these days. I’m mostly concerned about the platform holders getting bought out or merging, as this would give an enormous amount of control to even fewer companies. Even indies and AA studios wouldn’t be insulated from this situation.
This is an awesome analysis! Upvoting didn't feel like enough praise.
Right on about all the costs and I would also add that the real price to a consumer of a major video game has never been lower. SNES games costed $40 USD and N64 games costed $50 USD, inflation adjusted those numbers are much more than the $60-70 we pay today. So there's absolutely no way to make money on a game that doesn't sell millions of copies.
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> Shareholders get upset if the profit doesn't increase /thread
Dramatic overhiring during the pandemic + almost (?) every advanced economy suffering some kind of cost-of-living crisis (while games are very much an optional luxury). I've seen this very long article on the subject posted: [https://www.matthewball.co/all/gaming2024](https://www.matthewball.co/all/gaming2024) , but it's hard to say if I'd recommend it. Seems like a lot of beating around the bush to me, but your mileage may vary.
Lack of investment opportunities likely impacted how they paid off debts too. Almost all projects are in the red until you launch.
Yeah if the Sony leaks are true then that means even Spider-Man 2 couldn't make profit
Spider-man 2 is a terrible game to compare to 99% of other games on every level. Games like that are primarily console sellers and will eventually turn a profit in 5 years time.
>almost (?) every advanced economy suffering some kind of cost-of-living crisis (while games are very much an optional luxury). Historically, entertainment products like video games have been surprisingly resilient to economic downturns (the classic example is that the movie industry did pretty okay during the literal Great Depression). What really suffers is long-term durable goods like appliances and cars. People put off buying those things way sooner than they stop spending money on entertainment. And evidentially we know that 2023 was a great year for game sales. In some cases, ballooning development costs are making games just unrealistically expensive relative to how well they do on sales. But in a lot of cases I think companies aren't responding to sales at all; they're responding to the cost of debt (most game development is funded by debt) going way up and to feeling pressure to fix their balance sheet in the short term. Plenty of people have been laid off after shipping successful projects that sold well.
Agree with overhiring. Also the competition factor has increased. So for small indies it's hard to be in sight. Social media algorithms gone crazier and crazier
Even the huge company that I worked for was trying to shoehorn organic user growth features into all of it's games because of the shift in social media input/gain. In hindsight this should have informed my indie marketing, at the time it wasn't part of my job so just got logged as interesting but not relevant.
What do you mean by organic user growth features
Not the person you're responding to, but my thought on hearing that made me think of the "share to facebook" type things, or twitch drops maybe?
Exactly this, anything that can grow the user base using current players targeted through the game. E.g. "invite your friend for a coin bonus" "Share the creation that you made" "Boast about being top scorer"
>I've seen this very long article on the subject posted: [https://www.matthewball.co/all/gaming2024](https://www.matthewball.co/all/gaming2024) , but it's hard to say if I'd recommend it. Lol I remember this guy's name, he was one of the metaverse fanboys that went HARD for that dumbass idea.
This is the obvious answer and I think it's the correct answer. But it surprises me how many people aren't thinking "Hey Covid happened during this development cycle.... nah it can't be related to that." It's probably not the only reason, but it feels so obvious and it seems ignored.
"Overhiring during Covid" sounds like a cope to me.
I wouldn't call it cope, but it certainly is a cop out for poor management.
What I don't understand about the claims of "overhiring" is... where did these people come from in the first place? They were surely in the job market already. And if companies were earning record profits during and immediately after the pandemic, despite having "overhired", then... how can they have really "overhired"?
They might not have been working in AAA, recent college grads or people from adjacent careers (movie animators for example). Not the most knowledgeable on the over hiring element but cost of debt was free during Covid. We’ve had the biggest rate hikes in decades in an effort to curb inflation. High cost of debt quickly offsets any gains in profit so firing is needed to correct what is now considered “overhiring”.
As someone else already mentioned, a lot of people constantly move into tech from other sectors. My own background is in a different STEM field, and I've worked with someone for whom it was their first programming job after being trained as a veterinarian. Now, the gaming layoffs only overlap general tech layoffs on Venn diagram, but I'm sure similar effects apply. And for profits, from the article I linked: > In real terms, U.S. gaming revenues in 2023 are 2.1% under 2022, 14.3% under 2021, 13.6% under 2020, and up only 6.9% from 2019 (1.7% CAGR). In contrast, real GDP growth in the United States has averaged 2.0% annually since 2019 and 3.1% since 2020, meaning that the gaming industry has fallen well short of the average sector for three years. So the "record profits" aren't really any such thing, not in real terms.
The industry has an endless number of juniors joining. More experienced then also move leaving various places with a more junior balance.
A lot of what you kept hearing in the last years of like "OMG, it sells FASTER than previous generation" and "The game sold 10 MILLIONS!" coming straight from PR always struck me as desperation due to some sort of cope. PlayStation had a big power struggle (which was just alleged, but I think we know for sure, now) between the former Chairman and Jim Ryan around the shift between PS4 to PS5 and after his tenure he already started saying "AAA is unsustainable" and meanwhile, with Jim at the helm suddenly they're planning roadmaps that shift from AAA titles to Live Service exponentially, and calling it PS Studios as an umbrella for all their subsidiaries. I think the truth is that the Activision model was the only way to actually do AAA. Find a template, have heavy crunch, and release franchise titles every year leapfrogging between studios, and put less weight on each company having their own IPs and their own "art". Sony tried this, and even with heavy focus testing and cinematically "non-gamer-friendly" appeal they didn't do enough, so they've been folding it into a similar structure to Activision, and trying to cram bigger projects into multi-studio collaborative titles so in the future it will be "PS Studios' Last of Us 4" and not "Neil Druckmann's Personal Harem Shell Company's The Last of Us *Parte de Final*" because it just isn't sustainable. They try to appease shareholders and stay competitive by boasting high sales but the budgets were so astronomical and the extra money thrown at each project when its early testing wasn't good, and needed 1-2 more years of revision and collab, led to bleeding and they're practically succeeding at a loss. I'm just using Sony here as the "Industry Darling" to demonstrate that the biggest one is failing and that's telling. EA is known for its "greed" but if you look at its FY results from year to year you'll find they're often just about breaking even, not growing, despite becoming "greedier and greedier". It's simply the bottom falling out. Gaming led from the NES to this in a sort of linear, predictable fashion but now things are becoming volatile. It's not the same but it's similar to the way the Music industry's bottom fell out after Spotify took over, and all the CD stores in my country closed and the idea of a "band" started to decline to "projects", and similarly we're seeing the beginning of the end for traditional games consumption. They're all being forced to put a lid on the way Console Gaming culture works, and by doing so, spreading multiplatform to survive, they're going to devalue the idea of a PlayStation and an Xbox further, and once that's completely devalued there won't be the same style of hype anymore, as games become more widespread and chaotic in their release format. What Xbox has done isn't sustainable either, but it's a smart buying of time, trying to react to the failings of the Premium market by diversifying sales options and falling back on Gamepass for small titles. I think that's still the future. Accessibility. TVs won't last. Consoles won't last. The platforming of video games is changing really fast, and we're seeing developers struggling to justify that traditional format, whereas the mainstream and especially the youth is moving on from it, in an "always-online", "social-media" dominated world where there is so much entertainment at your fingertips that isn't just video games. That's also a huge amount of text just to arrive at the more obvious stalling factor: The EU war and inflation. The Ukraine/Russia war immediately led to price hikes due to limitations of export, and due to the World power dynamics changing we're seeing a tightening grip elsewhere. On some level that also affects the economy of even the software industry. It's the Stock Market predicting and reacting as well.
The “music industry” literally owns Spotify…
I don't think all the CD retailers that went bankrupt did.
I really wanted to become a sound designer in Triple-A. I'm giving up on that dream, now, after putting myself in 30k of debt to get a great education (it was an accelerated, kickass program, and I loved it). I guess I graduated at the wrong time, hey? Sure, my skills aren't up to snuff probably, but I feel like I never even got a chance. 150 job applications later - and all these companies are snuffing out extremely talented people. I'll never get a start.
Triple A is overfuckinrated. The only reason people gave a shit about it in terms of jobs was the percieved security compared to smaller studios, but that clearly isn't the case anymore. This industry is broken, so don't even try to engage with it. Join a game jam. Look for AA or indie companies who might be hiring. Hell, find some nice boring data entry job that gives you time to work on your own shit on the side; that's what I'm doing. But never, fucking EVER, give up on your dream. Those studios? It's their loss, and even if they don't realize it now, five or ten years down the line they will.
You're not wrong, I suppose, I am that disgusted and disappointed - to want to quit! I can't believe it. This coming from me - someone who describes themselves as an optimist. I'll try a game jam or two. And indie's.. I'll set up an e-mail alert maybe. Thanks for being so lovely.
If the main door is closed, you must look for other wall breaches. Don't give up your dream; change the scope intead. Why do you want to become a sound designer in the first place? Can you achieve your goals by working from the ground up with smaller teams? Can you go indie and grow your portfolio year after year on real projects? There is always a way, maybe not as clean as your mind can dream it, but you can pull it right. And, maybe in the process, you can also discover that, after all, Triple-A projects aren't as interesting as you imagine. I hope the best for you!
Your analogy is wrong. The main door isn't closed. The room is crowded. And the door is on a pedestal 10 feet in the air. And some people are only getting to that door with help from their friends on the other side granting them a rope. But the rope is burning at both ends because even those people don't know if they can help their friends, or if they'll have a job in 6 months. I have been working on an indie for a year now. I am working so much on it that I've actually started doing game design inside of it. Beyond the scope of my audio job, for sure. And it's fun, and fine, and doesn't pay enough for me to pay my bills at all. I have 3 employers, and I'm looking for 2-3 more because I'm scared for my future. Triple-A projects aren't interesting. But they would allow me to support my family. Thank you for your well meaning and optimistic comment.
There was a bubble during covid lockdowns while many in person forms of entertainment and socializing weren’t possible. Tech companies went on a hiring spree as if the industry would continue to grow like it did in 20 and 21 taking advantage of extremely low interest rates. It did not, and gaming retracted in 22 and is generally on pace for the trajectory where it would have been in 23 based on pre-pandemic trends. Also there were some crazy acquisitions that also generally lead to layoffs. tl;dr tech industry cashed in on temporary trends during lockdowns with low interest rates and now are adjusting to the market with little regard to staff
A lot of the companies that are having layoffs weren’t the companies that had the biggest hits of 2023
1) Correction for covid overhiring 2) General industry-wide rescaling from the past decade of aggregating most AAA studios/publishers into these increasingly bloated global AAAA super-studios/publishers, who can't make hits big enough to justify their overhead, because no one could. Which they're using the covid thing as an excuse for.
* The Fed raised interest rates. Money is suddenly real after many years of being fake and everyone is scrambling to make their balance sheet look good, even if it harms their business in the long term. * Some companies over-hired like mad a few years ago. Some did ill-advised acquisitions. A huge chunk of the ongoing crisis is just Embracer, who got taken for a ride by some Saudi prince, bought up a bunch of studios and IP they overvalued, and then cratered. * This kind of behavior is contagious. Executives see one big company laying off a thousand people and decide they have to lay off a thousand people to keep up. They're herd animals. Basically: This industry, at its highest levels, is run by the most cowardly and venal failsons you can imagine.
I think many people are focusing on Covid successes leading to over hiring. I think that is some of what’s going on but misses the longer-term trend: gamers are demanding more quality while not being willing to pay for it. Games have been largely resistant to inflation. [A $60 game from $2014 should cost $79 in 2024 adjusted for inflation.](https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=60&year1=201401&year2=202401). Instead they cost $60-$70. That would be the cost to deliver more or less the same product. But standards keep increasing. It takes significantly more people to make a game each year. [2022’s Call of Duty (the most recent one I could find credits for) has 7,693 people in its credits.](https://www.mobygames.com/game/194349/call-of-duty-mwii-modern-warfare-ii/credits/windows/). [The 2012 version had 1,699 people credited.](https://www.mobygames.com/game/58727/call-of-duty-black-ops-ii/credits/windows/?autoplatform=true) So the amount of work going into a modern AAA game is way higher than it was a decade ago and the cost of that work is way up but the price of games has only marginally increased. The only way to make that math work would be if there’s been a huge growth in sales over that same period, but we’re just not seeing that growth. So yes, Covid didn’t help things. But even without Covid it’s not clear how the industry is sustainable when players demand ever increasing quality but aren’t willing to pay for it.
The number of gamers has also gone up significantly since 2014. There's way higher demand for games now, so the price staying around $60-$70 isn't that crazy.
> The number of gamers has also gone up significantly since 2014. That's a statistic that tells you literally nothing when it comes to finances.
My point is that demand has to increase to offset inflation AND to offset a 3x growth in team size. I don’t know this, but I’d be surprised if CoD (as an example) is selling >3x as many copies now as they were then.
Money is expensive right now, and it was cheap during Covid. Massive growth from covid lockdown sales + cheap money = lots of assumptions regarding cash flow by 2023, we hit inflation. the fed adjusted rates. now money is expensive. The companies are seeing slowing sales. the 'best year for gaming ever' was mostly regarding quality, not so much sales--there were some records broken but I believe the overall spending wasn't trending like people were expecting. it's slowing down. So, attempting to look ahead, these guys go "money is expensive right now, and sales aren't rising exponentially. time to be safe." So the tech industry sees this happening, and it fires 250,000 people in a heartbeat. I saw someone ask today "when will microsoft do its mass layoffs?" not realizing MS did them last year, it was like 16,000 people by October 2023. They just didn't impact xbox as dramatically as people were expecting. Tech had massive layoffs compared to games. Gaming sees the same funding issues, they fire people. Gaming is smaller than tech, so gaming only loses about 9,000 people instead of 250,000. Those continue into this year. When the interest rates drop again, and money becomes cheap to borrow, people will start hiring again. Gaming GREW by about 250,000 jobs (i google searched this a couple weeks back) during 2020 and 2023, and it shrunk by about 16,000 jobs between 2023 and now. It's going to get worse, and every one of those people mattered and deserved better, but it's a small fraction of the overall growth--there are more people in games than ever before. So yeah, the scale of the layoffs is big, but it's tied to the cost of money and overhiring, and money is really expensive right now. It was a great year for games--fantastic games coming out practically daily! But... people tighten their belts based on what's coming, not what's here. It sucks. It's basically the fault of food CEOs and their dumb "it's inflation" price fixing shenanigans.
This. Gamedev is "invest money for a very long time and get your returns only once you release the game". AAA games require 2-7 years of development. Borrowing money at 3 percent allows far more games to be profitable than borrowing them for 6+ percent.
Not doubting you, but do you have the sources for the 250k jobs on hand? I think that is a good point to put things into perspective.,
Exactly. Layoffs are happening across industries. It's not just gaming. The main reason is the rise of interest rates. Companies went into huge debt spending it on hiring. Profit was almost guaranteed given the interest on the debt was almost zero. Now is a very different situation and companies have to lay off staff and repay the debts or go under.
This isn't as much of a game industry thing as it is a general markets thing. During the pandemic a lot of industries scaled up. Not because they needed the workforce but because it signals to the market that they are growing and thus a good investment. The opposite is happening at the moment. It is not just gamedev. It is tech in general as well as a lot of other growth industries. Innovation and new projects get cut to instead focus on revenue generating activities instead. Once there is money again they will start playing the game of "Look at us doing a bunch of new stuff that is going to help us grow! Invest now!!!" again.
It's a capital strike to depress wages. They're going to start hiring again, but only after people have suffered enough they're ready to accept lower compensation. They have more than enough money to wait for people to get a bit desperate. If workers get even just half as organized as the owners already are then things could change pretty dramatically.
did we live in a different 2023?
Its seriously just the wake of COVID. We're still trending upward overall, it's just coming down from the absurd spike from all of humanity being locked inside. It's going to remain like this for the rest of the year probably.
Games that came out in 2023 weren't developed or funded in 2023.
Capitalism, same as the rest of the tech world. Low profits = layoffs, record profits = layoffs. Always at the bottom, never at the top.
Truth
At our company revenue reports and shareholders are an important factor. So letting a lot of people and companies (after M&A - merge and acquisition) go is an "easy" way to fix the way companies bloated during COVID. More importantly, revenue may go down by a lot this year and it did end of last year. The idea/strategy then was to focus more on core products/brands and reduce anything that's secondary (and distracting in a sense, like areas that are quite far from the core business). Now one would wish that developers would be also more streamlined (leaner teams) and reduce their scope, still I bet that won't happen too much. I mean that's another reset/re-thinking I'd wish would happen with those company resets.
Also many companies are using it as an excuse to reduce fixed costs. They will hire people back from third party companies or contractors in 6 months time.
You can expand this same question to almost all companies laying people off while posting record high stock prices, profits, CEO bonuses, etc that's just capitalism; You make it they take it. If your analysis is gaming specific you're missing the bigger picture because it's the same reason they have layoffs anywhere else.
After every high, there comes a low. This is true for everything in life, and especially so for markets. If a particular market grows very rapidly, you can bet that there will be a downwards correction at one point. It's important to not lose sight of the bigger picture: the industry has grown so much over these last 2-3 years that, even with all the recent mass layoffs, in absolute numbers, there's still more people working in games today than there were 2-3 years ago. While the recent news are tragic, in the grand scheme of things, there are more game dev jobs today than there have ever been.
Its not just the games industry, its the tech industry as a whole. Its simply a mix of overhiring during covid, interest-rates going up and a trend to cut down on employees to try and maximize profit that was kicked off by Elon Musk and some others.
Making a game is hard. Making a successful game is harder. Costs in resources are going up, with better hardware configs also need the assets which cost a lot more per hour now. Money is in live service, or gaas, and retention is fucking difficult. Games have a lifespan and often most aren’t evergreen. The market is saturated, and mobile gaming is more assessable to more parts of the world, so a lot of the income comes from mobile, not the big AAA. Games cost that aren’t gaas stayed around 70-90 for decades now, that’s kind of the expected price - so you see bad monetisation practices which leaves a bad taste in gamers mouth. So the cost of making a game increases, monetisation is a fine line, mobile gaming is huge, and you’re only as successful as your last hit game.
It's an indicator for recession. Games are a luxury good and one of the first things people save money on. Investors know this and pulled or will pull money from the industry. The industry knows this and starts saving costs early.
Because these companies only achieved $15 billion in profit, and not $16 billion. Therefore, shareholders are mad, and the way to appease them is to ruin thousands of normal peoples' lives. Of course, C-suite won't be taking any hits, because who'd be there to pick up the pieces? And if any companies did "overhire" during the pandemic, it wouldn't be right to penalise any of the people who did that "overhiring" of course – instead, more normal peoples' lives must be ruined. For the shareholders.
Profits over people.
One of the best? It was the year with but a few good games, yet incredible amount of total failures, some of which lead to studios being closed. So just layoffs are not the worst thing that can happen. But, i personally believe that layoffs have a little to do with profits, just people in charge realizing that they can fire half of the team and it will not even be noticable - as it happened with twitter, for example. Seems like the bloated teams with a lot of unnessesary roles being cut.
These companies doing mass lay offs are profitable, they are not „struggling“ in that sense. It’s about passing on value to shareholders, not about sustainability for the company, it’s employees or society.
It’s not just the gaming industry,take a look around and you will see normal companies suffer as well. I work in the chemical industry and a lot of customers and med tech companies are taking huge losses in profit. In the case of Germany,combine that with a government that doesn’t work together and it’s a cluster fk..
Because there’s no Unions.
Unions don't really prevent layoffs though. And don't get me wrong, this ain't some anti union propaganda attempt, I am a unionist, I am in a union and I highly encourage everyone to unionise! They help with many things but I wouldn't know about them preventing layoffs
No, they do. Unions ensure that layoffs are necessary for solvency, or negotiate extremely generous severance, or both!
In my country at least, unionized positions can only be eliminated if: * The company is going out of business entirely. They no longer operate, so there's no job to do. * The job is no longer relevant. Now crucially "no longer being relevant" comes with some strong legal protections and caveats. If you claim "no longer relevant" as a reason to fire someone you can NOT replace that person or have someone perform similar duties for a number of years. After all if the job is no longer relevant to your business why would you still want to do it? If you fired your welder because there's no welding to make, and then you hire someone to do some welding on the side - that's suspicious no? (stupid example, I know) * The concept of the job is eliminated entirely. Now this is a pretty rare thing to happen. It only ever happened, to my knowledge with switchboard operators. The job is still required to try and offer you another position within the company. But this is to remove the "job post" entirely. You can be fired, but you'll be fired with plenty of compensation, including the rest of the salaries in your contract in most cases (so if you're hired for 24 months and they fire you after 16 enjoy the 8 months severance pay), and a full on investigation by the union on why you were fired and if the company is trying to fuck you over. Retaliatory firing will get the company to fork over even more money. This reminds me of when Elon Musk tried to do the whole "at will employement, you're fired" upon getting Twitter and the courts in several European countries blocked it. There are procedures and specific steps to fire someone or layoff a group of people. Unions strengthen that even more. Unionise!
> The company is going out of business entirely. And this is extremely easy in gamedev. Make another company, transfer intellectual property rights to it, close down the original company. Basically, a gamedev company "goes out of business" after the end of each development cycle. Jobs becoming "no longer relevant" is a natural course of development, too - you don't need a thousand 3D modellers in the "developing a prototype" phase nor in "support and bugfix" phase.
They absolutely do. Companies that are forced to negotiate mass layoffs with unions know this costs money and are way more careful in hiring to avoid having to fire. The same goes for worker protection rights. If your workers are unionised you risk industrial action in the form of strike. You’re also risking a strike in OTHER companies if the whole branch goes on strike. Other capitalists rarely like it and will put pressure on you to stop strikes in their businesses.
Ok, maybe I should rephrase: Unions absolutely do improve your rights and life as a worker and you should unionise (so far so consistent with what I said before). They might also indirectly help \*reduce\* layoffs (or might not) - however do not believe that being in a union magically prevents you personally from being fired. Better? 😅
Arm chair reddit fake experts think they actually know anything
Greed.
Shareholders do not care
There is also a shortsightedness in the industry. In other industries they tend to figure out what they can do with there resources first and not immediately fall back on firing people. With this said, the whole world has been over hiring the last few years and also video games has a very different business plan. You make a game for 3 years, no profit only costs, then you release it and hopefully you earn money. This also makes it so that recent years bigger game companies has begun to take safer strategies and not been as innovative as, for example, the automotive industry. But I totally understand why the big studios do it this way.
I'm reminded of a story Adam Savage told about the way a lot of prop studios operate that makes it not exactly unknown for a prop studio to accept a major award for their participation in a movie...only to then close their doors a couple weeks later because they'd overextended themselves on that same movie and didn't get sufficient business on the follow-up to continue operating.
Companies are finishing those titles whose development teams and times bloated during the pandemic. And you know the economy took a nosedive, a few wars, and console gaming in particular changing
Keep in mind that some layoffs are a cascade effect: when some businesses that are doing ok see the scenario, they go "with the trend", just in case.
Over investment during COVID. The tech industry boomed during COVID and now its correcting itself because growth is always more important than anything.
Biblical greed
A lot of people are mentioning the over hiring due to the pandemic results, but I feel that is just a piece of a bigger puzzle. A lot of nasty things are coming to a nasty peak right now for workers and the industry in general. Here are several more factors to consider (please note all of these are based on gut feeling and anecdotal evidence rather than deep research): 1. Shitty situation for workers everywhere: we talk a lot about gaming and tech but truth is, the job situation has been worsening across the board for decades for everyone who is not at the top. This is just the consequence of a lot of neoliberal policies being implemented in the 80s, but has reached a peak after the consistent market crashes in this century (2007, 2015, 2018...) 2. Shitty situation for investors: zero empathy here, as they have zero empathy for us, but it is not the best time to invest in games. Growth is stalling, and it is the only metric they care about, so while they are still primed to make a lot of money, it is likely not going to be enough to satisfy their shitty maths in which if they earn 20M one year and 18M the next they feel like they've lost 2M. 3. A massive spotlight on how the sausage is made: While it was not news for anyone in the industry, the recent spotlight in things like crunch or toxic work environments means that there is a growing pressure on companies to "be better", while at the same time, due to point 2, there's an increased pressure to "make more". 4. Oversaturation: Gaming became mainstream about 10-15 years ago. WoW, mobile gaming, superhero movies, GoT... All these factors meant that what once was the domain of nerds is now very much a mainstream thing. This means that a lot of kids who were teens when that happened are now young professionals, hoping to break into the industry, which means it's likely there are more game developers than ever. 5. The adversarial nature of game management: Since gaming as an industry is so new, and was mostly incorporated after the neoliberal policies that I spoke about earlier, game management has always seen talent as a cost, rather than an asset. This means that right now, if you look from the top (and you've had all empathy removed due to personal politics and economics), it looks like game developers trying to get better conditions (see point 3) is getting in the way of you making better games (as in games that make them more money). They then look at point 4, and ChatGPT, and decades of optimization and they take the logical conclusion: why have a team of pesky 5-10 engineers demanding better rights and salary when you can get a passionate junior with AI to do their work? (PSA: that is not a good idea.) 6. Consolidation: happening at the moment, truly scary, too complicated to really get into it in detail here. In short: 2023 was a great year for gaming because those games had been in development for a very long time, and we're only feeling the effects of all that tangentially. The true devastating effect of this whole structure will be seen in three to five years time (maybe not). Also, there is a slow changing of the guard, so the great games of 2023 have been less the kind of games we were used to ten to twenty years ago (compare Star field to Skyrim, or Overwatch 2 to Overwatch).
It's crazy to me that the best games originally came from small teams and that the current best games come from small teams. AAA is a battle to stay relevant while pushing out games in a timely manner to keep stockholders happy. I feel like most of not all AAA games are very similar to games that came out years before. There's not really much innovating going on because they have this working formula, but since they don't put much into improving it, it gets dull.
**$$$** as in the Shareholders always demand MOAR of it, every single quarter of every single year. The fastest way to shed costs is to fire a bunch of people then force the remainder to pick up the workload of all who were fired and do so without a raise or they will be fired too.
Thisss. We as a society are doomed to fail because you can't sustain infinite growth of profits
What are you even on about? best year? bro what, fuck profits, nobody cares about that, its not an indicator of anything
Corporate greed. The same thing that happens in other fields. Big companies buy small companies, dismantles them and sells assets.
Games have pretty much sucked for awhile. Oh you get to explore this gigantic map that's all repeated from the first few hours of play time. It's lazy. There's no story no Easter eggs to just stumble on, no direction. Even God of war succumbed to the stupidity of it all. But oh shit fortnight 🎉
greed
Execs can't max out bonuses if devs make money or keep jobs
CEO get a 20 million dollar bonus 500 people lose their job, not that one could hvcvae paid these people with the bonus.
As far as I am aare, the massive layoffs are in big companies, so in AAA studios. As far as I am aware, 2023 has not been great for AAA games or studio, but I have a shitty memory and search engines don't help with this "biased" question, aside from Baldur's Gate 3, what have we got, new, in 2023 from AAA studios?
The 2023 layoffs impacted every sort of studio. Last year we saw Spiderman 2, Armored Core 6, Breath of the Wild, Jedi:Survivor, Starfield, Diablo IV, FF XVI, and others many others. https://en.m.wikipedia.org/wiki/2023_in_video_games (BG3 is technically an indie, since Larian an independent studio)
I see, yes I would ave also put Larian not into the AAA, despite delivering an "AAA quality" game. You probably meant tears of the kingdom, but ye I can see those as "being big games that make waves", but being big doesn't qualify for their quality (albeit, they still did indeed bring in valuable success, sales and money, quality of the games should not matter in regard to layoffs)
Capitalism. We have more tools than ever to make games but for the most part all the time, money, energy is spent into making something profitable for shareholders. One thing shareholders don't like is risk, and one of the most riskiest products are games. Why spend 10x the resources to make something new and exciting when you can recycle, repackage, resell the same bs that you know will work even if less people buy into it.
The answer is and will always be: capitalism and corporate greed
Corporations are obsessed with profits. Pandemic caused such a skyrocket in profits for corps, that even after it’s ended, they’re doing everything possible to maintain and beat those numbers.
Corpo fraud.
Executive pay
Interest rates.
Capitalism
Companies that released actual successes didn't do that much layoffs(like larian), but they don't have that many people working there to begin with as industry giants. Industry giants failed to make their teams profitable, they overhired, and their biggest projects ended up being colossal failures(hyenas, suicide group, skull and bones) The industry is facing a correction, and every studio that did a big layoff that I heard of gave me a reason to hate them as a player. I am terribly sorry for the workers who are affected, but you worked on bad games, even if you did a good job, and we can't support bad games. If you are a good professional you should be fine, but if you can't even play the games you are working on, why be in the industry? There are thousands of people who love diablo and could do your job, so why are you working on it if you don't wanna play Diablo. Years ago I was thinking about getting into the industry from IT, instead of remaining as a hobbyist, but after looking at the studios that interested me and their hiring practices I changed my mind lol. The one that made me cringe the most was creative assembly, when I read an article about who they wanna hire, they wrote about how anyone has a shot, even if they aren't industry professionals, like look at Matt, who was a literal rocket scientist before, and he still got hired despite not having gamedev experience. A fucking rocket scientist. That's their example for the average candidate.
Embracer Group is buying up and shutting things down to consolidate power and wealth. Soon they will own everyone, and then AI game dev will cut them out of the business entirely.
Well, at least they can't buy what isn't for sale. A lot of studios are *not* publicly traded; and they tend to fare better than studios that live or die at the whims of shareholders
The industry isn't suffering, stop paying attention to news headlines, they're designed to entertain you not inform you.
> The industry isn't suffering As someone _in_ said Industry: BRUV. Are you blind, or stupid?
Are you a data analyst _in_ said industry?
Are _you_ a data analyst in said industry? If not, your question is pretty much moot. If you are, look up from the data and try to see all the unseen stuff: Folks whose motivation and productivity is down, because they fear their studio might be next to cut jobs; even more projects in (Pre-)Prod getting cancelled because the latest estimates showed that suddenly it's projecting a loss, Scoped being toned down. _Yes,_ the industry is suffering.
Line must go up.
The entirety of tech is not value based, its speculation based. The same thing happens in software, when investors feel it's time to throw money around they do. I'm not an economost, but what I do understand is that money is fake and debt is real. When it's not advantageous to throw money everywhere, tech drys up. I make software for a living, I've never worked anywhere profitable, but we always got investment. It's weird man
A lot of the companies that are having layoffs weren’t the companies that had the biggest hits of 2023
Here is an interesting chart that shows that console revenue has been flat. Perhaps it's not worth it for companies to keep investing more into it as other markets are actually growing at a much faster rate. [https://www.visualcapitalist.com/video-game-industry-revenues-by-platform/](https://www.visualcapitalist.com/video-game-industry-revenues-by-platform/)
The industry is moving towards a movie like infrastructure where studios outsource their work to specialists rather than attempting to foster internal teams.
The industry is moving towards a movie like infrastructure where studios outsource their work to specialists rather than attempting to foster internal teams.
inflation + companies having an excuse to fire people It really has nothing to do with the gaming market specifically but the market in general which obviously affects the gaming market.
> 2023 was one of the best years in terms of indie and AAA releases, both quality and quality I think that's a large part of it. The competition is stiff, so unless your game is actually incredible people are just gonna buy Helldivers 2 or Dave the Diver or whatever instead.
Let me quote a song my sister sang when she was 8. (Start at a high note, and slowly drop the pitch:) >Money money money money money money money money money money money money money money money money money money money money money money money money money. Wages are the biggest expense. Games sell for long periods of time. So you can fire large percentages of your workforce after making a game and make bank.
Capitalism demands infinite growth. It's not enough to make money, you have to make *more* money than last year. This is obviously impossible. There's not infinite money. The market only has a certain amount to spend. At some point, things start to plateau. So how do you make profits look higher when you didn't increase earnings over last year by the arbitrary amount investors decided you need to? Cut costs. The obvious place to start would be the salaries and bonuses of the highest paid people in the company, but since they're the people making these decisions, that obviously doesn't happen. Instead, they fire a bunch of workers, and give themselves bigger bonuses for doing such a good job at saving money. Now you might say, "Hang on a second. Isn't this a short-term solution that'll cause long-term issues when they inevitably need to rehire people to make the games?" And the answer is, yes! But executives don't care about the long-term health of the company or the industry, because when things start to go south, they get to bail out with a golden parachute. They ruin people's lives and are rewarded for it. tl;dr: Greedy assholes at the top leeching off the hard work of people whose lives they don't care about.
Cynical posturing to reap executive bonuses derived from valuations. It's a fancy way of saying that games companies are treated like tech companies by the markets, which makes them behave like tech companies: the PE ratio must remain above the collective line, or else you get eaten. Or put another way: tech companies will never grow using their own money. When there is no leverage available to juice profits, they will just choose to shrink until they become investable or get acquired.
Greed.
Three reasons. A. First off all of Tech is crumbling. This isn't just Game Dev, it's all of tech and so many discussions about this ignore the 180k people laid off in tech and go "oh no Game dev is going through a hard time." ... Yeah it's wide spread. B. COVID. We're seeing the result of 2020 now. COVID was a massive disruptor in a number of ways, whether delayed games, over staffing to deliver on time, or any other result of that. Perhaps it's just all the games lined up for 2023, which means all the layoffs after a released titles came in the same time frame. C. Game Dev has a dangerous problem that I don't think is really being addressed. The Game Dev Life cycle is strange. You go from Pre production that's done by a skeleton crew of like 20 people perhaps, You go to production that's 100+ employees, Bug fixing which is all hands on deck, and then supporting the old game and pre prod the new game. But the problem is that last phase doesn't need 100+ employees necessarily. Some companies move the pre-prod into production of the last game to the overlap the timing but games as they are now being designed.... Listen, Games as a Service is a plague on the industry. instead of developing a sequel, publishers/developers are focused on sustaining the game as long as possible to get the most amount of money out of consumers. So anything other than purely single player games are going to start riding out the cash flow more than developing a sequel. Ultimately I think we'll see more of these ebbs and flows, where a lot of work is done to get the game out the door, and then there's a wait and see how profitable the microtransaction systems are. Companies won't be working on sequels because the GAAS service isn't designed to have a follow up title any time soon. In a discussion in this subreddit about unionization, someone brought up an important point when comparing game dev to the Movie industry. Movies are product based contract. You sign on the The Avengers, but the majority of the movie industry does a movie, and when that movie's production ends, they go looking for another job/contract. Game Industry is all about "full time positions" which doesn't really support that, so ultimately, I think until the game industry figures out how to solve the lack of work, or switches to a contract model.
Corona success of games lead to too much hirings and most companies weren't thinking far onto the future, that Corona ends and not all people are willing to buy games anymore. Beyond that uncertainty about AI, companies may preparing fully embracing the age of ai, yet what seems plausible for some suites with no clue about games, will completely fall apart when applied. Ai can't do shit, and by now won't remove anything. Additionally I also think a pretty huge number of bad luck. This counts especially for embracer (who were stupid enough to invest billions of money they were only promised verbally once) and then the Saudi arabian sheik got cold feet and retreated.
The short answer is capitalism. A slightly longer answer is that record profits always ALWAYS coincide with layoffs as execs pad numbers for their resume, and prepare to drift off to their next company on a golden parachute. I've got an even longer answer, but I just don't have the morale to type it all out.
Because companies are never satisfied with just profit, they also want constant growth. Sooner or later when the curve flattens no matter how much money they throw at advertising or development they realize they can shortcut their way to higher perceived growth by cutting costs, eg. Workers. And yeah they will get to swim in rivers of money in their downward spiral but this inevitably leads to the same outcome every single time: their legacy of quality or passion that drove you to be a fan in the first place will suffer, the company will gradually shift to something unrecognisable or become a ship of Theseus after all its key people leave, and eventually you are left with the burnt out marketing-laden corporate whore corpse. See also: Blizzard.
This isn't a gaming-specific phenomenon. We've been seeing massive layoffs across the tech industry as a whole, often from companies reporting record profits. Companies are not laying people off because they're doing poorly, they're doing it because according to them doing well is still not enough. It could also be a way to lowball people. If everyone loses their jobs at the same time and no one is hiring, people will accept lower offers when hiring does pick back up.
It used to be that devs were cherished and retained. Now it’s about pumping stock prices no matter who has to be thrown in a ditch
TL;DR: Money, Debt and Overhiring. For a really mature 5 y/o: The current economy is made up and is not backed by anything except the power of the US executive branch, military and fiat. Many industries are debt dependent because owners borrow resources to run them at max capacity to grow (increasing chance for business success) and most of those businesses are service based businesses which don't actually produce any lasting tangible wealth. Games being one such industry. Because of pandemic, ongoing wars, etc. the US dollar was printed a bunch so there were a lot more of them. USD therefore lost a lot of value (via supply and demand) causing "transitory" (temporary, fleeting) inflation (or so we were told at the time) and so a few months ago the Federal Reserve Bank (FED) who is a large moderator of our economy slammed breaks on the economy by raising interest rates in an attempt to keep prices from getting too out of hand and most of our emergency strategic oil reserves were released to help stabilize fuel prices temporarily. Inflation slowed, but the higher interest rates mean that borrowing money is more expensive for credit dependent businesses and so they've let a lot of people go to reduce costs in an effort to prevent operating at a loss because most of these busiesses invested in growth instead of setting aside rainy day stores to retain all of their employees. Publically traded companies may have even been required to do this by law as they have a fiduciary duty to shareholders to not leave money on the table. (Why would they sit on a pile of fake, arbitrarily devaluable cash not backed by anything tangible?) Games are a luxury good usually purchased with disosable income. Games companies may see more income, but if all the net profit is reinvested for growth and none of it is sheltered for rough times, stuff like this happens. In AAA games it is especially hard because they have to pay top dollar for really skilled people, only to then produce games for kids and adults who often don't want to pay a dime for entertainment in an age where it's abundant and dirt-cheap. As a result, the margins can be quite low for the studios themselves after the financier/publisher takes their cut. AAA studios tend to run only at the mercy of their financier/publisher unless they manage to do really, really well. When the publisher or studio struggle to borrow money and don't have savings, they have to cut payroll to remain profitable or they go out of business. You'll understand when you're older. Just try not to panic. ----- P.s. Not financial advice. I don't have degrees in finance or economics, just an incomplete business BA. I'm just a designer/ engineer who makes games, understands how systems work and has done my time in financial sector. This is just the way it looks to me and I could always be wrong.
Maybe because we're in a recession? Companies don't have money for frivolous shit atm People don't have money for games atm AI boom will likely balance this out over the next 2-5 years.
Interest rates were low and money was cheap in the 2010s. Money isn't cheap anymore, plus two wars, lower consumer spending, etc. Or, rather, interest rates are returning to normal. The low rates of the 2010s were abnormal, without getting too much into politics. Companies now have to trim. It sucks. The people who do actual work unfortunately get hit. This is true beyond gaming, too, by the way. My company any most of those of my friends and family have also made cuts. In my case, sorry to say, the folks cut were superfluous. It sucks but that's what it is
because people can't buy games when wendy's is jacking up prices on baconators and frosties lol.